x Abu Dhabi, UAEThursday 18 January 2018

Rebuke to Canada on 'frustrating' airline talks

Despite five years of negotiations, the UAE has been unable to secure a deal for more landing slots for Emirates Airline and Etihad.

The Government yesterday said it was disappointed with the Canadian government after a half-decade of failed negotiations to expand UAE airlines' access to Canada.

In an unusually frank public statement, Mohammed Abdullah al Ghafli, the UAE ambassador to Canada, said: "It is unfortunate that this process has been so protracted and frustrating."

He added: "The UAE is disappointed that despite intensive negotiations over the last five years, the UAE and Canada have been unable to arrive at an agreement on expanding the number of flights between the two countries."

In Ottawa, the Canadian capital, a spokesman for the department of foreign affairs and international trade said his government "fully expects to maintain a positive relationship with this important country", adding that it would continue to monitor the air travel markets between the two nations.

Emirates Airline and Etihad Airways want greater access into Canada to bolster their long-haul networks. Currently each is allowed three flights a week into Toronto, but they have asked to expand this to daily flights to Toronto, Vancouver and Calgary. Emirates uses its 489-seat Airbus A380 superjumbos to balance the high demand with its limited landing slots.

"With 27,000 Canadians living in the UAE, and a significant trade relationship [the UAE is Canada's largest trade partner in the Middle East and North Africa, with bilateral trade figures of over 1.5 billion dollars of which 95 per cent is Canadian exports] as well as 200 Canadian companies active in the UAE today, six flights per week does not service the economic needs of both countries or the potential for growth," the UAE ambassador said in a statement.

Canadian authorities have said they would not permit greater access because there are already enough flights to meet demand for travel between the two countries. At stake in this dispute is market share in the vast air travel network between Canada and the Middle East, Africa and Asia. The Gulf's airlines compete with Air Canada for passengers travelling between Canada and countries such as India, from which many Canadian immigrants originate and to which they travel to visit friends and relatives.

To serve this market, Air Canada - which does not have direct flights to the UAE - relies heavily on international hubs such as Frankfurt, from where it feeds traffic to its Star Alliance partner Lufthansa for passengers continuing onwards.

Air Canada is a major employer in its homeland, with nearly 25,000 employees, and has suffered with the global downturn. Last year, it took a $1.02 billion Canadian (Dh3.38bn) loan package from its government.

But some of those jobs are at risk as Emirates and Etihad have been increasing their share of international air travel, a shift in economic power that has prompted nations including Canada, Germany and France to try to limit the advance by refusing to allow more frequent landings.

“The Canadian government is committed to underwriting its flag carrier for the next couple of years,” said Peter Harbison, the executive chairman of the Centre for Asia Pacific Aviation, a think-tank based in Sydney, Australia.

However, he said “the pressures for liberalisation are very powerful – there is no question it will prevail”.

For years, Emirates has been the most vocal proponent of allowing greater market access into Canada, and invested huge resources in its fights. It sponsored a study by transportation consultants InterVISTAS this year, which found that if Emirates were allowed to set up new flights to more Canadian cities, it would be a boon for Canada, leading to US$480 million (Dh1.76bn) in annual economic benefits and more than 2,800 direct and spin-off jobs.

With more flights, an additional 274,927 passengers would travel through Canada annually, according to the research. Most of the economic benefits would come in the form of tourism, new business activity and taxes, the study said.

The study was welcomed by some groups such as the Consumers’ Association of Canada. “If it is a good deal, let’s get along and do it,” the group’s president, Bruce Cran, said in March.

Mr Harbison said that on the whole, protectionist air transport regimes were easing, and that liberal, “open skies” policies were becoming more common. “Eventually, consumer forces will prevail,” he said.