On March 30, the long-awaited European Union-United States Open Skies agreement (phase one) came into effect. With talks ongoing between Canada and Europe, it is worth taking a look at what the immediate impact already has been.

The pre-Open Skies environment with the EU was a much different one for the U.S. than it is for Canada. The U.S. already had Open Skies agreements with many of the individual EU members.

In contrast, Open Skies with Canada would replace several restrictive bilateral regimes with key EU members, as Canada currently only has Open Skies agreements with members Ireland and the UK.

The EU as a Single Market

Most new EU/U.S. Open Skies route announcements have been related to new access to Heathrow, most notably among U.S. carriers. However, under Open Skies, the EU now is recognised by the U.S. as a single market. This allows any EU carrier to fly from any EU gateway. There have been initial steps for carriers to take advantage of this:

Air France has begun a daily Boeing 777 nonstop flight between Los Angeles and London Heathrow Airport, something the French carrier previously would have been unable to do. The airline is codesharing with Delta on the new route.
British Airways has launched a new brand, "Open Skies," which will operate BA Boeing 757s between European gateways and the U.S. The flights flights are between Paris and New York starting in June with flights to be added from other European cities in the coming months. The plan is to expand the fleet to six aircraft.

is expected that a Canada-EU Open Skies agreement also would recognise the EU as a single market, allowing European carriers to open similar routes from any European city to any Canadian city.

EU-U.S. Round Two

Phase two talks between the EU and the U.S. get underway this year. At issue are continued foreign ownership/control restrictions on U.S. carriers and U.S. domestic cabotage.

Cabotage in particular, which would mean domestic U.S. flights by European carriers, has typically been opposed by U.S. air carriers and worker groups. It also would require an act of Congress.

Cabotage and foreign ownership could be issues in the Canada-EU talks as well. The previous-Liberal government had proposed limiting foreign ownership limits to 49% - a proposal that was supported by the opposition before an election intervened. Cabotage currently is opposed by the Canadian government in its Blue Sky international air policy.

Prospects for Canada

As Canada-EU talks continue, the potential boon from an Open Skies agreement is significant. The EU is Canada's second biggest trading partner and source of tourists. And Canada and the EU members generally have more restrictive air service regimes in place than the U.S. had with most of the EU members.

According to a study launched by the European Commission, the number of passengers between the EU and Canada would increase from eight million now to 14 million by 2011. In addition, the EC estimates that an Open Aviation Area would generate consumer benefits of at least $110 million through lower fares and could create 3,700 jobs in the first year.

In addition to the Canadian Airports Council and its partner Airports Council International-Europe, the Canadian Chamber of Commerce and the Tourism Industry Association of Canada (TIAC) have encouraged the federal government to conclude an Open Skies agreement with Europe.