Tuesday, November 16, 2010

The Saga Continues, Air Services Agreement between Qatar and Canada

Canada has signed an Air Services Agreement with Qatar (here to read more) weeks after both the Canadian Government and Air Canada opposed it. It seems Mr. Al Baker's alluding to the possibilities and impossibilities of investments and trade had helped people in Ottawa make up their mind.

"This agreement responds to the needs of the Canada-Qatar travel market and is a first but important step in developing Canada-Qatar air relations," says John Babcock, a spokesman for Canadian Transport Minister Chuck Strahl.

Sounds great and should equally apply to the UAE which is almost 4 times a larger market with a much larger Canadian Community however Air Canada is still self delusional and dragging the government with it

Recently Air Canada chief executive Calin Rovinescu said the carrier "is not supportive of turning over our hard-earned network and flow traffic to state subsidised carriers of countries where there is no such reciprocal demand".

So in his eyes all of a sudden Qatar Airways is not a subsidised carrier and there is more reciprocal demand with Qatar than the UAE.

I respect the need to protect a "hard-earned network" including its feed to and from Star Alliance partners. It appears that Air Canada has an objection to a Dubai Global Hub and it fears that if Emirates, not Etihad per se, dumps capacity into Vancouver for example it will deter all other airlines from competing out of Vancouver and generating 275,000 new seats per year will decimate Vancouver as a hub and make it into a stub in Emirate's Dubai hub.

Air Canada has indicated that they oppose any increases in frequency or addition of flights to the UAE and Qatar, in order to protect their traffic to Frankfurt. Lufthansa (Star Alliance) will operate from there onwards to MENA and the GCC. Basically it boils down to a capacity issue coupled with a level of service. Air Canada does not have the lift to operate additional flights or to operate directly to the UAE and Lufthansa probably has different plans.

Canada is a popular immigration destination for professionals from MENA, GCC and the Indian Sub Continent. It is also a popular destination for higher education from the region. Hence, this is a growing market for "Visiting Friends and Relatives"

Air Canada needs to leverage its Star Alliance connections to tap more into this market or start operating its own flights to the region.

The unfortunate escalation between the UAE and Canada over this issue so far has been low key, even though to Canadian residents in the UAE it has an impact on the mobility of their non resident family members.

Hopefully, the issue will be resolved to the mutual benefit of all concerned.


  1. Over the years, Luxembourg has done a great job negotiating open skies deals around the world - because nations believed it to be a harmless little country they need not fear. Maybe they should have remembered Cargolux and its large B747F fleet and an ability to truck cargo onward throughout Europe.

    It will always be more in the interest of the smaller entrepot hubs to open their trading routes and skies to all and sundry - simply they have less to lose. Despite all this, there is little argument that the world is slowly moving towards global open skies.

    And in my personal opinion, ordering Canadian government aircraft out of UAE airspace, closing a military base that served troops in Afghanistan and introducing $1,000 visa costs for Canadian visitors are measures that elevate a business issue too far into the political arena - and are not in line with the UAE's usually excellent standards of long-term diplomacy.

    Just my t'penny's worth ...

  2. Hi Oussama,

    Always interesting to read your blog ...

    As I understand it, the new deal between Canada and Qatar allows for three weekly direct passenger and three direct cargo flights between the two countries. So, it is less 'open' than the agreement already in place between the UAE and Canada which allows for daily services. There is not much new here I feel.

    Whether or not we agree with the strategy of Canada, and of course I concur that there are very strong general economic arguments for open skies policies, the fact remains that each nation has a constitutional right to control its skies as it sees fit. If it does not want to relinquish that control, that's its choice.

    Singapore Airlines has been trying for years to serve the Australia-US market as it allows Qantas/Jetstar to pick up traffic in Singapore enroute to Europe but it has repeatedly been thwarted by Canberra. Likewise, India has recently clamped down on awarding additional route rights to the 5 UAE passenger carriers serving its skies - which has forced flydubai to look further afield for markets to place its growing B737 fleet.



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