Open Skies agreement to spur 'new era' in transatlantic flight

Consumers can expect more flights and possibly cheaper fares for travel between cities in the U.S. and the European Union as of Sunday, when the Open Skies agreement takes effect.

Under the new rules, EU airlines will be able to travel to any city in the U.S. from anywhere within the EU's 27 member states and vice versa.

The old system required airlines to depart from or land in their native country (an Air France flight, for example could not fly directly from New York to Frankfurt). Airlines were also restrictedwhen it came toflying into certain cities, with airport agreements negotiated for select carriers.

EU Transport Commissioner Jacques Barrot told a press conference in Belgium that the agreement would bump up volume by 25 million extra passengers over the next five years.

"This marks the start of a new era in transatlantic aviation. This agreement will bring more competition and cheaper flights," he said.

However, Barrot noted that discussions to expand the agreement are scheduled to begin May 15 . EU carriers are seeking more investment opportunities and the power to operate domestic U.S. routes.

Canadian watchdog recommends fewer restrictions

Canada's Competition Bureau in January pressed Ottawa to relax ownership restrictions on Canadian airlines. In a report submitted to the Competition Policy Review Panel, the federal agency said Canada should allow foreign-owned carriers to operate domestic routes in the country, saying similar policies have been successful in Australia.

"A Canada-only carrier would use Canadian crews, be required to comply with all Canadian laws and regulations and be subject to the same competitive conditions and input costs as any other Canadian carrier operating in the domestic market," the report said.

"At the same time, this would open the market to new entry, or the threat of new entry, which would allow consumers to benefit from more competitive markets."

The Bureau suggested increasing limits on foreign ownership of voting share in Canadian airlines from 25 per cent to 49.9 per cent.

The Air Transport Association of Canada, an industry group representing the country's airlines, opposed the proposal, saying such an agreement would onlybe acceptable if Canadian carriers were granted the reciprocal rights in another country.