Etihad Airways and Air Canada have struck a deal that will open up new destinations in North America and give passengers from Canada access to Etihad's networks across the Middle East, Africa and Asia.
A memorandum of understanding (MoU) signed yesterday will result in the two airlines providing reciprocal code-share services through Etihad's Abu Dhabi hub, to destinations served by Air Canada through its Toronto hub.
The deal will effectively open up Canada for passengers travelling from the Middle East, and in light of this week's deal between Etihad and India's Jet Airways that will link 23 Indian destinations into Etihad's Abu Dhabi hub, it will offer significant travel opportunities to more than 960,000 Canadians of Indian subcontinent origin.
It is also being regarded as a further thaw in relations between the UAE and Canada, and follows a recent decision by both governments to restore the previous visa regime allowing Canadian nationals to be granted free visa entry on arrival in the Emirates.
And on a wider scale, aviation analysts believe it could be the start of Canada opening up its traditional protectionist stance towards its airline industry.
"Both Etihad and Emirates [Airline] have been pressing for some time for better access to Canada, Emirates aggressively so. It is a huge untapped market, and the Canadian authorities have been very jealous when it comes to handing out international routes, essentially to ensure their national carrier remains dominant," said John Strickland of JLS Consulting in London.
"I suspect it has taken Etihad a lot of very patient negotiation to achieve this result," added Mr Strickland.
"And this will be good news, because the net result of protecting Air Canada has been that Canadians have had to suffer less choice and high prices. But you can't keep the door closed forever."
Etihad, which currently flies three times a week between Abu Dhabi and Toronto, already has an interline agreement for passenger and cargo services with Air Canada. However the MoU will now offer through-checked bags and frequent flyer benefits between the airlines, and will pave the way for full code-share services in the third quarter of this year.
Subject to regulatory approval, Etihad will place its EY code on Air Canada flights out of Toronto to destinations across Canada, and Air Canada will place its AC code on Etihad flights from Toronto to Abu Dhabi, and between London Heathrow and Abu Dhabi.
"This is without doubt a significant development in our relationship and very much supports the aim to simplify travel between the UAE and Canada," said James Hogan, the president and chief executive of Etihad.
"The benefits contained within the agreement will give passengers far greater choice, flexibility and convenience and will greatly enhance business and leisure travel between the UAE, Canada and beyond, by feeding passengers into each other's flight networks."
The UAE is Canada's largest export market in the Middle East, and some 150 Canadian companies, 40,000 Canadian citizens, are based in the country.
"We are pleased to establish a mutually beneficial commercial cooperation that will provide our customers with more travel options and frequent flyer benefits," said Air Canada's president and chief executive, Calin Rovinescu.