Viewing cable 03OTTAWA612, Canadian Transportation Strategy Unveiled: Aviation

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 OTTAWA 000612 
 
SIPDIS 
 
STATE FOR WHA/CAN - PATRICIA NORMAN, EB/TRA - SUSAN PARSON 
 
STATE PASS USTR FOR JOHN MELLE 
 
USDOT FOR JEFF SHANE, SUSAN MCDERMOTT 
 
FAA FOR KRISTA BERQUIST 
 
TSA FOR SUSAN WILLIAMS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR EINV CA
SUBJECT: Canadian Transportation Strategy Unveiled: Aviation 
Focus 
 
REF: A) OTTAWA 00374 (Ambassador's Lunch with Minister 
 
Collenette) 
 B) OTTAWA 00385 (Air Canada Financial Woes) 
 C) 02 OTTAWA 2824 (Aviation Report Recommends 
Liberalization) 
 D) 01 OTTAWA 0383 (Liberalization, Foreign Carriers 
considered) 
 
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Summary 
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¶1. The Government of Canada's strategic vision for 
transportation policy was unveiled on February 25th, 2003. 
There appear to be no radical departures from past GOC 
positions; gradualism is the key note struck by the authors 
of the policy statement. The policy vision addresses all 
modes: air, marine, and surface (rail and road). This cable, 
however, focuses exclusively on aviation issues (other modes 
will be addressed septel). From the US perspective the key 
message is that GOC intends further "gradual liberalization" 
of Canada's bilateral air agreements. More substantive 
aviation developments for the US may arrive, however, via 
the "exploratory talks" which Transport Minister Collenette 
and his Deputy suggested to Ambassador Cellucci (Ref A). 
End Summary. 
 
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Policy Vision in development since mid-2001 
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¶2. The policy vision, with the title "Straight Ahead: A 
vision for Transportation in Canada" is the final version of 
the Transportation Policy Blueprint initiated in July 2001. 
This effort, in turn, was precipitated by the final report 
of the independent, blue-ribbon, Canada Transportation Act 
Review (CTAR) panel which contained 92 recommendations to 
the Minister to improve regulation of Canada's 
transportation sector (Ref C,D). The "Straight Ahead" 
document, as well as the CTAR panel report and other 
supporting documents are available on-line at the following 
URL: 
 
http://www.tc.gc.ca/aboutus/straightahead/men u.htm 
 
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Aviation Liberalization 
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¶3. With respect to civil aviation, the key action item of 
interest to the USG is that the GoC "will continue the 
gradual liberalization of Canada's bilateral air agreements, 
using the 1995 Canada-United States Open Skies agreement as 
a guide." 
 
¶4. The authors of the policy vision note that there is 
continuing pressure on the government to remove restrictions 
on foreign participation in Canadian domestic and 
international air markets (Ref C, D) and, "under the right 
circumstances, opening Canada's air markets to greater 
external participation on a reciprocal basis could introduce 
some new competition and lead to greater efficiency." "In 
the government's view, however, now is not the appropriate 
time to undertake this step" since "the harsh realities of 
the current marketplace indicate that the primary effect of 
making such a significant change would be to weaken an 
already vulnerable industry." 
 
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Airport governance 
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¶5. To clarify the respective responsibilities of the 
government and of airports of national significance (e.g. 
Toronto, Vancouver, Dorval/Montreal, Calgary) the GoC, 
intends to set out detailed rules for airport authorities to 
follow respecting governance, accountability and 
transparency of economic issues at national airports. 
Comment: This is a welcome development, in the past both 
passengers and airlines have complained about murky 
accounting for the large sums of money airports acquired 
through levying a variety of fees on passengers and airlines 
(Ref B). End comment. 
 
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Industry comments 
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¶6. Air Canada officials are disappointed in the GoC plan. 
They commented that although the new policy vision 
acknowledges the unprecedented crisis in the airline 
industry, the GoC has offered no concrete relief (read 
direct financial aid) to the industry. 
¶7. WestJet, the profitable low-fare operator in Canada also 
appeared under-whelmed by the GoC policy vision. The item 
pitched directly to the smaller airlines was the GoC promise 
to introduce laws forcing Air Canada to offer interlining 
and sharing of frequent flier points, in which WestJet, as a 
low-cost operator, has no interest whatsoever. WestJet 
complained that there was little consultation between the 
airline and Transport Canada in the development of the 
policy vision 
 
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Comment 
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¶8. With respect to civil aviation the policy vision provides 
impetus for a series of low key, incremental developments, 
largely administrative in nature. There will be no dramatic 
moves to liberalize the aviation sector as has repeatedly 
been recommended to the government by independent panels, 
observers, parliamentary committees and even the GoC's 
Competition Bureau (Refs C,D). Indeed, the announcement in 
the February 18 federal budget that the Aviation Security 
Fee will be reduced from $24 to $18 per domestic round trip 
far outstrips this policy vision in significance (Ref B). 
More substantive ideas on aviation liberalization may have 
to await discussion in any future "exploratory talks" of the 
type broached during the lunch between Minister Collennette 
and Ambassador Cellucci (Ref A). 
 
Cellucci