Canada and Philippines Establish New Air Agreement

Canada and the Philippines have established a new air services agreement that will increase the number of flight entitlements between the two countries and expand fifth freedom rights. The latest amendment replaces the previous agreement signed in December of 2008.

Image Source: Air Canada

According to Carmello Arcilla, Executive Director of the Civil Aeronautics Board, the new agreement doubles the number of flights between Canada and the Philippines. "The new agreement increased the frequency entitlement for each side from seven flights a week to fourteen," said Arcilla. "Fifth freedom was also increased from four to five per week."

Fifth freedom rights enable a carrier to pick up passengers in the country of destination and fly them to a third country. In this case, PAL uses fifth freedom rights from Canada to the United States. Philippine Airlines previously used these rights to fly passengers from Manila to Vancouver, pick up additional passengers in Vancouver, and then continue on to Las Vegas. However, the carrier discontinued that service in December 2012. Canada receives fifth freedom rights from the Philippines to Australia.

Philippine Airlines has been actively pursuing expansion in the United States and has been eager for the successful renegotiation of the Canada-Philippines air services agreement to permit the carrier to launch new flights to New York via Vancouver. The carrier is also contemplating flights to Chicago and Florida. 

Arcilla added that both countries also agreed to permit third-country code-sharing that would enable carriers such as Air Canada to code-share on a possible route between Vancouver and New York. Philippine Airlines is presently the only carrier flying between Canada and the Philippines. It is believed that Philippine Airlines is planning up to fourteen flights per week to Vancouver that may continue onwards to New York or Toronto. 

Meanwhile, Philippine Airlines may not be alone in the Canada-Philippines market for long. Air Canada is currently enhancing its existing Asian routes to lure more Canadian tourists, while preparing plans to launch new destinations in Asia that will take advantage of the rising middle class in emerging economies such as India and China. 

With the arrival of Air Canada's new 251-seat Boeing 787 Dreamliner aircraft, the carrier is now exploring further growth in Asia. The carrier will be using its first 787 on a route between Toronto and Tokyo Haneda. But Air Canada already has plans to deploy additional 787 aircraft between Vancouver and Tokyo Narita as well as between Vancouver and Shanghai. 

According to Air Canada's CEO Calvin Rovinescu, the long-term growth potential for Air Canada and other international carriers stretches beyond the major hubs of Asia. "We're not talking about the obvious Asian cities that have already been developed," said Rovinescu. "There are many cities in China where there are millions of people, and the middle class there is starting to fly for the first time, starting to afford air travel."

He added that possible new non-stop destinations for Air Canada could include New Delhi, Mumbai, and Guangzhou, noting that from the airline industry's perspective, Asia will one day account for the bulk of growth in the aviation sector. "We fully expect Asia to be the main driver of air travel over the next decade. We've only been scratching the surface," said Rovinescu. 

In the Vancouver market, Asian carriers have been battling Air Canada to capture the visiting friends and relatives market, while in Toronto, Air Canada has had to deal with the threat of Asian carriers luring business passengers. Although Air Canada has not officially identified Manila as an upcoming destination, the economics of the 787 aircraft combined with Canada's growing overseas Filipino population make the Philippines an interesting prospect for the future. The growing popularity of the Philippines as a tourist destination and the rising Filipino middle class could also help to make the country worthy of future consideration. 

Air Canada just accepted delivery of its first of 37 Boeing 787 Dreamliners last weekend. It is expected that the Canadian carrier will announce new routes between Canada and Asia as the airline examines the optimal use of its upcoming 787 deliveries.