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Canada wants to keep Emirates out of the Canadian market

Jul 26, 2009

As federal cabinet ministers boast about opening Canadian skies to foreign airlines, transport officials have been quietly undermining plans by one of the world's biggest airlines to expand service to Toronto, documents obtained by the Star show.

In private briefings, Transport Canada officials have gone on the offensive against Emirates Airlines' request for greater access to the Canadian market, charging that the Middle Eastern carrier is "an instrument of government policy" and is heavily subsidized by the public purse.

They also suggest Transport Canada should shelter Canadian carriers from competition.

The federal government's response to Emirates' request has sparked a sharp rebuke from a senior airline executive, who accuses Transport Canada officials of making "slanderous" allegations.

In a letter to the department, Emirates Senior Vice-President Andrew Parker claims that despite the promise of extra tourism, new jobs and other economic benefits, Transport Canada wants to keep Emirates – a global carrier serving 60 countries – out of the Canadian market.

"The language Transport Canada has used over the past decade is aggressive, often biased and deeply objectionable to this carrier," Parker writes in the letter obtained by the Star.

"The real aim of these rejections is sadly to keep Emirates permanently away from Canada. ... Emirates will not be deterred," Parker writes.

The spat offers a window into the world of international air treaties, where visions of a global economy often clash with deep-seated sentiments of protectionism, national self-interest and economics.

Senior Canadian cabinet ministers have pushed for closer ties to the United Arab Emirates. That suggests the resistance to Emirates' bid to fly more often to Canada lies within the federal bureaucracy.

At the heart of the growing dispute is a request from Emirates Airlines to increase flights between Dubai and Toronto, as well as start service to Calgary and Vancouver.

The request has won broad support among municipal and provincial governments, who say the extra flights would mean more tourism, new investment and more jobs. It's estimated allowing Emirates and another UAE airline, Etihad Airways, to boost flights into Pearson alone would produce more than 500 jobs, $20 million in salaries and $13.5 million in tax revenues.

However, Transport Canada insists the current cap of six flights a week from the United Arab Emirates to Canada – split between Emirates and Etihad – is enough to serve the market.

But in a presentation obtained by the Star, titled "Blue Sky, Canada's International Air Policy," given to stakeholders this spring, senior Transport Canada officials voiced other reasons for not moving on Emirates' request, including:

"Emirates and Etihad are instruments of government policy. ... The governments are helping finance massive wide-body aircraft orders and massive expansion of airport infrastructure."
They say the market between Canada and UAE is small, suggesting it's not worth the attention.
It cites an independent study that says the public-financed expansion of aviation in the Persian Gulf will lead to "unhealthy competition and irrational commercial behaviour."
It suggests Canadian carriers need to be protected. "In international aviation, as in other strategic areas, countries are very much driven by self-interest. Canada forgets this rule at its peril," the briefing paper says. "Our sky is open, at least as open as can be given ... our national interest."
But in a six-page rebuttal to Brigita Gravitis-Beck, Transport Canada's director-general of air policy, Parker says the government allegations are ill-informed and "strongly in error."

"We are particularly offended at the suggestion – without any substantive foundation – that Emirates receives government support for aircraft purchases. We receive no subsidies or government support," Parker writes.

While Emirates is state-owned, Parker says the airline operates on a fully commercial footing with no public subsidies.

And he charges that federal bureaucrats are deliberately trying to shelter Air Canada from competition, though it doesn't fly to the UAE.

"Unlike Air Canada, Emirates does not enjoy any aero-political protection – the greatest form of subsidy," he writes.

Parker also ridicules the government claim that the existing market is insignificant, saying the true potential of the Canada-Dubai route cannot be realized because Ottawa has restricted the flights.

He says Ottawa's hard-line attitude has not changed in the last decade, despite "extraordinary" trade growth between the two nations.

"We do hope that Transport Canada will adopt a more balanced and accurate view on Emirates."

Transport officials said yesterday they were unable to comment on the dispute or their own allegations involving Emirates.

Canada wants to keep Emirates  out of the Canadian market
Source: The Star

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