Canada and EU sign deal to open aviation marke

Wed May 6, 2009 11:48am EDT
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By David Brunnstrom

PRAGUE (Reuters) - Canada and the European Union signed an "open skies" pact on Wednesday under which airlines from the two trading partners will be able to fly freely between any airport in the 27-country EU and any in Canada.

"This will generate major benefits for consumers and airlines ... and will make the EU-Canada aviation market one of the most open in the world," European Commission President Jose Manuel Barroso told a news conference.

The deal will replace an existing patchwork of bilateral agreements between Canada and European states, which include restrictions on routes, prices and the number of weekly flights.

The agreement will also ease restrictions on control and ownership of airlines and follows a similar pact between the European Union and the United States in March last year.

The deal came at the start of talks on a trade pact worth an additional $27 billion each year to the combined economies of Canada and the EU, suffering from weakening trade amid the financial crisis.

"We were trying to reach this agreement somewhere from the 1970s," Prime Minister Stephen Harper said of the trade deal. "Finally this agreement we have is a glimmer of light in the darkness of the global recession."

A study by the executive European Commission suggested the aviation agreement would generate an additional 500,000 passengers in its first year, plus over 1,000 jobs and economic benefits of at least 72 million euros ($96 million).

Canada already plans to raise the foreign ownership limit to 49 percent of an airline's voting stock from 25 percent -- a move welcomed by the country's main carriers, Air Canada and WestJet Airlines Ltd, which want more inward investment.

In a later phase of the deal, investors will be able to set up and control airlines in each other's markets, and in a final stage, airlines will be able to fly freely within each other's markets and onwards from there to other regions.

(Writing by Pete Harrison, editing by Dale Hudson)

<p>Canada's Prime Minister Stephen Harper (L), Czech Republic's Prime Minister Mirek Topolanek (C) and European Commission President Jose Manuel Barroso pose for a photo during the EU-Canada Summit in Prague May 6, 2009. REUTERS/Chris Wattie</p>