Vancouver is experiencing a wave of interest from foreign airlines, especially from expanding Middle Eastern carriers looking to enhance traffic to their hub cities.
But federal regulations in Canada are keeping them at bay, even when there’s a demand for new routes.
Vancouver’s Turkish community has launched a petition to bring Turkish Airlines to YVR through a direct flight to Istanbul. The petition has 1,556 signatures, and members say the airline is eyeing either Vancouver or Seattle as a destination.
Vancouver Turkish Canadian Society president Tolga Tosun said Turkey established a consulate in Vancouver last year to increase business interactions, and the flight could boost those efforts.
“Vancouver’s Turkish-Canadian community has quadrupled since 2010,” he said. “If TA does not fly to Vancouver, they will definitely fly to Seattle — and the Vancouver airport will lose a lot of customers. Personally, I have work here, and my son has school, but I definitely fly at least once a year. And I would say 65 per cent of the Turkish community fly to Turkey once a year, with 30 per cent flying more than once a year. And there is a big Turkish community in Seattle, and I am sure they would prefer to come to Vancouver to fly to Turkey.”
He added the flight would be attractive to other Middle Eastern, Central Asian, Eastern European and North African communities. Using YVR’s own calculations for a new flight’s economic impact as a guideline, Tosun said a thrice-weekly flight would contribute $13.2 million annually to the B.C. economy while creating 239 jobs.
Regulatory approval is the main hurdle, industry observers say. Airlines from countries without an open skies deal with Canada are restricted as to the frequency of direct flights and destinations they can fly. Details are negotiated between governments, not airlines.
Bill Clark, one of the few Canadian lawyers specializing in air transport laws, likened these deals to free-trade agreements.
Domestic carriers like Air Canada are protective of Canadian airspace and are unwilling to allow the creation of an uneven playing field with foreign airlines that are state-owned or subsidized.
“Canada is really far from an open sky policy, and unless you have support from a Canadian carrier, it is difficult to augment your number of flights or cities (for a foreign carrier),” said Clark, who worked on the existing Canada-Turkey deal. “They (Turkey) accepted a bilateral that limited service to two Canadian cities: Toronto and Montreal. If they want to serve a third city, the bilateral air service agreement will have to be amended.”
Air Canada, Turkish Airlines and the Vancouver Airport Authority declined to comment.
The United Arab Emirates sought improved Canadian access several years ago, seeking to add YVR as a destination for its two main carriers, Dubai’s Emirates and Abu Dhabi’s Etihad. Air Canada objected, fearing the foreign airlines would draw passengers away from the domestic carrier, and Ottawa opted to not reopen the agreement.
In 2013, Air Canada president and CEO Calin Rovinescu stressed the importance of protecting Canadian airspace against airlines like Emirates at a speech in Vancouver.
“Air Canada has long favoured liberalization where it provides benefits to all involved,” Rovinescu said. “But as with any trade deal, you expect reciprocal benefits. … The Gulf carriers are seeking to scoop or divert connection traffic — transit passengers that are already travelling to or from Canada. They are seeking to build their hubs … at the expense of our hubs, including YVR.”
He cited the example of Australia, where extensive access given to airlines like Emirates drained domestic carrier Qantas of many international routes, resulting in a partnership of the two airlines that turned Australia’s hubs into “stubs,” feeding their traffic to Dubai’s hub instead of building travel through Australia’s airports. That comes at the expense of local jobs and economic vibrancy, Rovinescu said.
“Fair trade in the skies … is not protectionist,” Rovinescu said. “It is merely ensuring that the interests of Canadians — and Canadian companies who contribute substantially to Canadian employment and the economy at large are fairly represented.”
Emirates started a direct flight to Seattle four years ago, and operates the flight twice a day, carrying many passengers who originate with Alaska Airlines in Vancouver.
“Since Emirates launched service to Seattle … in March 2012, it has flown more than 900,000 passengers on the route,” said Rob Gurney, Emirates’s senior vice-president of commercial operations in the Americas, in a statement. “Our code share with Alaska Airlines helps makes this a fairly seamless experience from Vancouver, and we’ve seen a strong demand for this service.”
Ben Schlappig, a Los-Angeles-based observer with industry blog One Mile at a Time, said Alaska is putting 275 passengers a day on the Emirates flights to Dubai, and many are coming from or going to B.C.
Revenues of several Middle-Eastern air carriers are at or near record highs, he said, and that means more carriers are likely to seek out additional cities such as Vancouver and thus bump into Ottawa’s regulations and resistance from Air Canada.
“I think you would find Air Canada is a lot more opposed to expansion by Emirates and Etihad than the Canadian government would be,” he said. “Behind the scenes, it’s really the airlines — especially in the case of Air Canada where you have one huge national airline — whose opinions matter a lot.”
Both Schlappig and Clark, however, noted Turkish Airlines has a major advantage that Emirates did not. The advantage is so clear that both are optimistic an Istanbul-Vancouver flight may be close to reality.
“(Istanbul) would be huge if that route was allowed to launch in Vancouver, so it’s absolutely a bigger threat (to domestic carriers),” Schlappig said. “But keep in mind Turkish is a member of the Star Alliance, so they’ve flown under the radar because they’ve been more open to working with other airlines in a mutually beneficial way.”
Star Alliance is one of three major air carrier alliances in the world and Air Canada is a founding member. Member airlines work closely together and have code-sharing arrangements that allows consumers of one airline to book a flight that’s operated by an alliance partner. It means that Turkish, by joining in 2008, already has code-shares with Air Canada to reach cities like Vancouver, and existing working ties mean a cooperative relationship rather than the adversarial one exhibited in the Air Canada-Emirates battle.
“I can’t imagine (Turkish) would start this process without having gotten Air Canada’s support,” said Clark, adding he could see the YVR flight coming as early as 2017. “Where one foreign airline may have a lot of difficulties coming in on their own, it appears to be very easy to do if you get the support of a Canadian carrier.
“If Turkish comes to me and say they would like to start up in 2017 and Air Canada is on board, well, it’s a slam-dunk,” he added. “If I were Turkish Airlines, Air Canada would be the first call I make after I come in the door. Without it, Canada is rather restrictive.”
Ethiopia — whose national airline joined Star Alliance in 2011 — received an expanded air transport agreement with Canada two years later.
Transport Canada acknowledged they are reviewing the case. “Transport Canada is aware of interest in Vancouver in an expansion of the Canada-Turkey air transport agreement,” the department said in a statement. “We are currently assessing the Turkish market, but have not yet come to any conclusions.”
Clark said it is unlikely that Canadian rules are preventing carriers from outside the Middle East from accessing Vancouver, given the city’s ample capacity with Asia and economic malaise in potential new regions like South America — where most destinations are served through U.S. airports, anyways.
Schlappig noted, however, that Canada expanded its air transport agreement with Australia and China in late 2015, and both the South Pacific and East Asia represents opportunities for Vancouver.
“I would be very surprised if we don’t see a Vancouver-Auckland soon, maybe even a Vancouver-Melbourne,” he said. “It’s a huge opportunity for growth there, and it has the highest chance of doing well … and if you flip the coin here, Canada actually wants a more liberal agreement with China, which they haven’t been able to get because China is protective of its airlines. So it goes both ways here.”