AIR CANADA PUSHES FOR NEW U.S.-CANADA OPEN-SKIES AGREEMENT

AIR CANADA PUSHES FOR NEW U.S.-CANADA OPEN-SKIES AGREEMENT

   Air Canada has proposed a full open-skies agreement between Canada and the United States, which would create an unrestricted, single aviation market between the two countries.

   The airline outlined its proposal in a letter today to Canadian Transport Minister David M. Collenette and U.S. Transportation Secretary Norman Y. Mineta.

   The two countries' current open-skies agreement, set in February 1995, provides for third- and fourth-freedom rights, allowing any number of carriers from both countries to operate as many flights as they want between Canadian and U.S. cities. The 1995 agreement, however, differs from the bilateral open skies agreements the United States has negotiated with more than 50 other countries in that it restricts fifth-freedom rights for passenger and all-cargo operations, the right for all-cargo carriers to serve points in the other country on a co-terminal basis, and full routing and pricing flexibility on all air service operations, especially to third countries.

   Those restrictions were put in place due to Canadian concerns on the impact open skies with the United States would have on the Canadian airline industry. However, Air Canada said liberalized policies have benefited shippers and passengers on both sides of the border.

   Granting sixth-freedom rights would allow Canadian and U.S. carriers to carry domestic traffic from each other's country over their respective hubs. Such rights would be consistent with'

   Air Canada’s proposal follows on Collenette’s statement earlier this week that the government would look at options such as “more foreign competition, modified sixth freedoms or cabotage” as an alternative to re-regulation to increase competition in the Canadian domestic market.

   “We need a market solution as a means to foster a competitive environment in the Canadian domestic market,” said Robert Milton, president and chief executive officer.