Opening Canada’s skies would help cross-border trade, tourism, investment and knowledge flows

Canada’s national men’s soccer team qualifying for the upcoming World Cup in Qatar was a huge achievement, given that we haven’t qualified for a World Cup since 1986. Although this is a great time in Canada’s sporting history, it won’t actually be easy for fans to go to Qatar to support their team in person, primarily because of outdated regulations that close our skies to international airline competition.

Isn’t it strange in the 21st century that the number of flights arriving in Canada from most foreign countries is still entirely determined by the federal government. That number, which appears to be picked arbitrarily depending on the country in question, isn’t based on consumer demand. In fact, airlines and airports play a role in allocating how many flights can arrive from a particular country only if Canada has an “open skies” agreement with the country. At the moment, Qatar is only permitted to land four flights in Canada per week. That’s obviously not ideal given the (albeit temporary) increase in demand for flights to and from Qatar.

This same arbitrary flight allocation applies to many other countries, among them many popular destinations for tourism and commerce. For example, Dubai in the United Arab Emirates is also hard to get to and from. The UAE is only allowed seven arrivals per week in Canada for both Emirates and Etihad Airlines.

If Canada were to open our skies and accept all the incoming flights the Canadian market could support, Air Canada wouldn’t be Canadian travelers’ only flight option and the resulting increase in competition very likely would bring ticket prices down.

Opening Canada’s skies would also help diversify where foreign flights land. The UAE has its national carriers primarily fly into Toronto, because with only seven Canadian landings permitted per week, it makes sense to prioritize Pearson over the alternatives. But if that arbitrary limit were removed, flights could both arrive and depart from other Canadian cities where market demand is strong enough, though not as strong as in Toronto.

These limitations are in large part why Canada does not rank very well on economy-adjusted air-connectivity. According to the International Air Transport Association (IATA), we ranked 32nd globally, based on pre-pandemic 2019 figures. In fact, despite having world class cities like Toronto, Montreal, and Vancouver, we have no cities in the air-connectivity top 20.

Changing how we approach international carriers should be a no-brainer given the immense consumer benefit it would bring. And open-skies isn’t even that radical a proposal: it would mean treating all countries and their national carriers the same way we already treat 23 countries (soon to be 24 with the addition of India) and the member-states of the European Union. For those countries, which include 10 in the Caribbean, the open-skies agreement allows any number of carriers to operate both direct and indirect services between Canada and another country, with airlines choosing the routes they serve, the frequency of their service and the prices of flights, without any restrictions. Simply put, for those countries we let the market and consumer demand decide the frequency of flights, not the federal government. But if a market-based approach is good enough for 24 countries plus Europe, why isn’t it good enough for all countries? We should let the market decide where Canadians want to travel to, how often and with what carrier.

But opening our skies wouldn’t just be a win for Canadian consumers. Growing air connectivity with the world has economic benefits, too. According to IATA, the historic correlation is that a 10 per cent rise in connectivity relative to a country’s GDP is associated with a boost in labour productivity of 0.07 per cent. Not great thrust but certainly worth having.

Opening our skies would help cross-border trade, tourism, investment and knowledge flows. As we all get back to traveling in a post-pandemic world, now would be a good time for Canada to modernize its rules and open our skies for good.

Originally published here



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