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“Open Skies” could turn YVR into carriers ‘stub’

Nov. 18, 2013, Vancouver - There's almost no debate over whether Vancouver International Airport should assume its rightful geographical and logistical role as Canada's Asia-Pacific aviation gateway.


November 18, 2013
By The Vancouver Sun

How to accomplish the goal is another story.

 

Last
week, Air Canada president and CEO Calin Rovinescu responded sternly to
YVR's calls for more "Open Skies" and fewer restrictions on foreign
airlines serving Vancouver.

 

At a Vancouver Board of Trade meeting
in downtown Vancouver on Wednesday, keynote speaker Rovinescu warned
against an idealized vision of opening YVR in situations where the model
doesn't fit. He said the support of a strong, domestic air carrier, one
willing to invest directly in YVR's hub operations, is the real way to
maximize Vancouver's gateway identity. Some foreign carriers – if
unfettered by rules – may turn YVR into a "stub" feeding into other
international hubs, he said.

 

"Lately, there have been lively
discussions on more 'Open Skies' policies … and many believe that it
will bring more airlines, more routes, more jobs, and nirvana for all,"
Rovinescu told the officials in attendance. "To me, that is a solution
in search of a problem."

 

Local officials have been discussing
boosting YVR's profile globally as an international hub. YVR head Craig
Richmond said last month he wants to leverage the airport's growing
Asian destinations and feeder traffic to gain flights to Latin America.
He argues any additional air traffic to YVR would boost revenue and
inject new blood into the economy of the Lower Mainland.

The
discussions often hark back to the dispute between Canada and the United
Arab Emirates a few years ago. Emirates wanted to serve western
Canadian destinations such as Vancouver and Calgary, but was
unsuccessful in getting permission.

 

Rovinescu said Canadian
airports are already plenty "open": 70 per cent of international air
traffic in Canada is from countries that have existing "Open Skies"
agreements with Ottawa, and the airlines industry ranks Canada among the
top 10 per cent globally in terms of international air access.

 

He
said it demonstrates the current model is working, and argues that
airlines not receiving more access to YVR are being stopped by Ottawa
for good reasons.

 

"Air Canada has long favoured market
liberalization … as long as it is a proper, fair and balanced
agreement that benefits both sides," Rovinescu said. "In markets where a
competitive airlines market exists, like the US, EU, Japan and China,
it makes sense (to open up) because Canadian businesses can go there and
get enough revenue to compensate for whatever competition they may face
here (in their home market)."

 

The concern, Rovinescu said, is
with the state-owned airlines that dominate some domestic markets – one
example is what he referred to as the "Gulf airlines" – where the
benefits of an "Open Skies" agreement would be one-sided and damaging to
Canadian business interests.

 

"These are self-regulated entities
with strict government control with a set goal in mind: benefiting their
local economy," he said. "They are seeking to build their hubs on top
of our hubs, turning our hubs into stubs that feed into their system.
That's the inconvenient truth."

Rovinescu
pointed to a common comparison case for Canada in the sphere of
international affairs: Australia. He noted that Australia's decision to
over-pursue air travel agreements left Qantas, its domestic carrier,
severely limited in its ability to compete internationally with airlines
such as Emirates, resulting in the airline losing many international
destinations outside of the Asia-Pacific region.

 

"Now, there is a choice for Australian customers (travelling abroad), as long as their choice is Dubai," Rovinescu said.

 

The
key to YVR's success, he stressed, is the strengthening of domestic
airlines like Air Canada, which has hub operations here and is willing
to invest locally to build lasting, sustainable operational growth,
creating a "real hub" versus one that is supported by many airlines but
is ultimately just a feeder to the global competitive scene.

 

Rovinescu
said Air Canada's commitment to YVR can be seen not only in its flights
from the airport (it serves 44 destinations from YVR and accounted for
45 per cent of the airport's traffic last year), but also in facility
investments such as the CAE Air Canada Flight Training Centre.

 

"This
is the type of investment only a Canadian airline can make," he said.
"The key to avoiding (YVR becoming a stub) is to ensure you have a real
hub here, where you have a number of connections from other local,
Canadian markets. As aviation technology change, aircraft is capable of
flying further, and it is crucial to bring in traffic from all over your
(domestic) network to create a robust hub.

 

"I think a domestic airline like us can do that."