UNCLAS OTTAWA 001197

SIPDIS

STATE FOR WHA/CAN (HOLST, WHEELER), EB/TRA (BYERLY), EAP/CM

STATE PASS USTR FOR SAGE CHANDLER

TRANSPORTATION FOR OST/IA (EDDIE CARAZO AND SUSAN MCDERMOTT)

COMMERCE FOR 4320/MAC/WH/ONIA/WORD

FAA FOR KRISTA BERQUIST

DHS/TSA FOR SUSAN WILLIAMS

E.O. 12958: N/A
TAGS: EAIR ECIN EINV CA CH
SUBJECT: Canada and China conclude expanded air transport
agreement


1. On April 19 Canada's Transport Minister Jean Lapierre
and International Trade Minister Jim Peterson announced the
conclusion of a new and expanded bilateral air transport
agreement with the People's Republic of China. The new
entitlements include possibilities for all-cargo and code-
sharing air services by the airlines of Canada and China.
In addition, it expands the 1973 agreement by providing for
a three-fold increase in permitted passenger and cargo
flights to be operated by more airlines between more city
pairs and under more flexible operating conditions than
under the previous agreement. (Under the terms of the 1973
agreement, Air Canada operated 7 flights per week
Vancouver-Beijing and Air China operated 3 flights per week
Beijing-Shanghai-Vancouver.)


2. Industry observers expect immediate benefits for both
national carriers: Air China will build on its daily
service between Beijing and Vancouver, and Air Canada will
start flying non-stop between Toronto and Beijing in June

2005. The air transport agreement comes in the wake of the
January 2005 recognition by the PRC of Canada as an approved
tourism destination - a move that is expected to result in a
dramatic increase in the number of Chinese visitors to
Canada. Official recognition means that Canada can now
actively market Canada as a tourist destination in China.
Last year, only 77,000 visitors came to Canada from China,
but some observers estimate that as many as a half-million
to one million Chinese tourists a year could seek to visit
Canada, making the approved status worth billions of dollars
and ensuring full flights to and from China. As for travel
the other direction, China Tourism Commission figures
indicate that some 348,000 Canadians traveled to China in

2004.


3. Post has been informed that it will be two to three
months before the agreement is released publicly (to allow
for translation into French). When a copy of the agreement
is available, we will provide it to EB/TRA.

Dickson