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Old November 12th, 2010, 12:18 PM   #1561
hkskyline
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Originally Posted by ACT7 View Post
A couple of things - yes Ottawa should help ensure fair competition so that AC doesn't go belly up. That's just a responsible thing to do when a national carrier is involved in fair bilateral negotiations. Ottawa has never said that EK will NEVER have expanded access to YYZ or Canada in general (as we've seen EK turned down other landing slots anyway, so to accuse Ottawa of being overly protectionist in this case isn't right) but that they need to follow the proper course of expansion that ALL other airlines have to follow.
It's true that EK has to pay equal landing fees and catering services, etc in foreign countries however that's where the equality ends. As I said before, protecting an airline from bankruptcy to ensure that thousands of jobs aren't lost is very different than Ottawa purchasing billions of dollars worth of airplanes, which is essentially what the UAE government is doing for EK. Ottawa also doesn't buy up empty seats to inflate revenue, a practice that EK has documented and has been confirmed by my step brother who worked for them for 7 years before moving back to Canada. EK's business model isn't really that different from most other airlines in that they have a hub and spoke system, however the quantity of seats that they have is overkill for the size of their market.
You had asked why BA is allowed 2 flights daily into YYZ (at one time they had 3 in the summer) - it's because the number of visitors alone from the UK into Toronto on an annual basis exceeds 200,000. If this was the case for the UAE, I'm certain Ottawa and AC wouldn't be putting up a fight.
But the point is you won't get fair competition when the ultimate objective of the government is to make sure the national carrier survives and does not go belly up. Surely, that cannot come unless the national carrier is actually competitive or restrict foreigners from making profits so the national carrier can enjoy monopoly pricing. I find it highly questionable that they can offer so much capacity for smaller cities yet would not budge on the largest one. That smells very suspicious of protectionism. Clearly, there is more profit potential out of Toronto than Vancouver or Calgary. So offering those routes to them instead of the best one smells very funny. 7 weekly flights to Vancouver and only 3 to Toronto doesn't make too much sense.

I hope Ottawa's approach is not to safeguard a few thousand jobs while the taxpayer has to put up with the cost of high air ticket prices and the insurance Ottawa needs to give in bailout money and loans when things go south for the national carrier.

I've never heard of the UAE government buying capacity on EK planes. Do you have some information or a source for this or is it some rumour circulating around? I'd imagine something like this can make their way to the WTO rather easily. Why didn't other airlines snap up on that point and make a big fuss?

By the way, business travellers can and do buy up multiple seats on many flights because their executives may choose to fly any one of them at the last minute depending on their schedules.

I don't think you can judge EK based on the size of their home market. They're after transit passengers, so the concept of home market no longer applies. They're not a big tourism market either, so looking at tourist arrivals doesn't explain why there needs to be so many flights. A more credible and reasonable indicator is the huge Indian population in Canada, which flies east and can route through Dubai to reach home. A few hundred thousand people and only 3 weekly flights seem a bit scarce.
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Old November 12th, 2010, 12:26 PM   #1562
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I don't understand how you quote this. One one hand you say that EK as a good business model and they are able to get the support of the government of the UAE but if Air Canada does the same thing, it is state protectionism. So, it is either one thing or the other, which is it?

From where I stand in reading what you have said, it is the same thing in one form or the other so then there should not be a complaint. AC does not receive any state loans or guarantees and have not for some time. It was in the national interest to keep them afloat with loan guarantees.

So lets be clear, a loan guarantee and a loan are two different things. So in effect they received a co-signer for the loan. Only if they AC defaulted would the government be responsible.
EK has successfully exploited its geographic location to be a major transit carrier. Asians and Australians can easily transit in Dubai for Europe and Africa, while North Americans living on the East Coast can use EK for India. They have strong support from their national government to get the traffic rights to succeed. I get a sense Ottawa has been good protecting AC from competition coming in, rather than actively getting more markets for AC to expand. Don't think significant expansion is on AC's plate right now anyway.

Similarly, Toronto and Vancouver's geography make them good and feasible transit points for Asia-bound flights for Americans. Yet this is hampered by high landing charges in Toronto, and a fairly weak US network out of Vancouver. Hence, Americans will more likely still go through their hubs in the US to fly to Asia. This is a huge potential that has not been adequately tapped.

Thus, I think EK has a better business model than AC.

A loan guarantee essentially puts Ottawa on the hook if AC cannot repay its debts. Ultimately, it's the taxpayer that has to fork the bill. Why should taxpayer money be put at risk for a failing airline? I'd rather have my tax dollars go into a profitable carrier earning a good return.
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Old November 12th, 2010, 03:41 PM   #1563
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Originally Posted by hkskyline View Post
A loan guarantee essentially puts Ottawa on the hook if AC cannot repay its debts. Ultimately, it's the taxpayer that has to fork the bill. Why should taxpayer money be put at risk for a failing airline? I'd rather have my tax dollars go into a profitable carrier earning a good return.
A loan guarantee is exactly that, Just a guarantee. If they default then Ottawa (the taxpayer is on the hook). Yet they did not. Please make sure to note all the information. Likewise, they were profitable this quarter with $261 million and made and operating profit. Like many airlines similarly in the US, they experienced the exact same thing and were in bankruptcy (CO, US, United, Delta to name a few). They received guarantees from different levels of govenrment.
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Old November 12th, 2010, 03:51 PM   #1564
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By the way, business travellers can and do buy up multiple seats on many flights because their executives may choose to fly any one of them at the last minute depending on their schedules.
The difference it that it is a business traveller (private enterprise) vs. the govenment owners who are paying. The funny thing is that on most carriers in NA, if you do this and don't use the first leg of the ticket, they cancel the remaining legs.

And I am not saying that they are being bought by the government of the UAE but I am responding to what was said. All I am saying is that the accusations are flying back and forth but at least you can see if the government is doing something here as they are audited and then these are made public. It may not be the best in the world but at least there is some accountability.

As for the offer of more flights to YYC/YVR, well, if the airline publicly declared they wanted access and released a report, well, why not call their bluff? Why did they not accept it? That also smells funny to me. If I were offered more slots to markets that I publicly complained I was not gaining access too and then turned around and refused them, wouldn't it be a bit odd?
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Old November 12th, 2010, 04:57 PM   #1565
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I hope Ottawa's approach is not to safeguard a few thousand jobs while the taxpayer has to put up with the cost of high air ticket prices and the insurance Ottawa needs to give in bailout money and loans when things go south for the national carrier.
Ottawa's mandate isn't to shun competition, as evidenced by the fact that they have just signed an agreement with Qatar, so ultimately 3 gulf carriers offering 9 weekly flights is far more competition that one carrier offering 14 weekly flights. I don't know how many different ways I can actually say this anymore - if EK had followed the normal course of bilateral negotiations like every other freakin' airline in the world, further expansion into Canada would have been inevitable. Be a self-righteous prick and this is what you get.
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Old November 12th, 2010, 04:58 PM   #1566
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Originally Posted by Toronto_41 View Post
The difference it that it is a business traveller (private enterprise) vs. the govenment owners who are paying. The funny thing is that on most carriers in NA, if you do this and don't use the first leg of the ticket, they cancel the remaining legs.
Business travellers don't necessarily do roundtrips. They may do one-way and hop a few cities in such a fashion before heading home. It could also be government officials have a deal to block a series of seats with the airline at discount prices due to volume, which would still be cheaper than buying individual tickets at the last minute. I need more information on why this practice took place and some real confirmation it existed.

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As for the offer of more flights to YYC/YVR, well, if the airline publicly declared they wanted access and released a report, well, why not call their bluff? Why did they not accept it? That also smells funny to me. If I were offered more slots to markets that I publicly complained I was not gaining access too and then turned around and refused them, wouldn't it be a bit odd?
But EK wanted expansion to all cities, not just 2 of the 3. EK wanted access to Toronto in particular, voicing out they wanted more than 3 a week, not any city across Canada in general. I doubt they'd be interested in flying to Yellowknife.
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Old November 12th, 2010, 05:00 PM   #1567
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Originally Posted by ACT7 View Post
Ottawa's mandate isn't to shun competition, as evidenced by the fact that they have just signed an agreement with Qatar, so ultimately 3 gulf carriers offering 9 weekly flights is far more competition that one carrier offering 14 weekly flights. I don't know how many different ways I can actually say this anymore - if EK had followed the normal course of bilateral negotiations like every other freakin' airline in the world, further expansion into Canada would have been inevitable. Be a self-righteous prick and this is what you get.
Actually, it's not EK that negotiates expansion and slots. It's the UAE. Note Qatar is getting no more, no less than what Emirates has right now. Considering Qatar is even smaller than the UAE, I wonder why both countries are allocated the same frequencies?
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Old November 12th, 2010, 05:07 PM   #1568
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A loan guarantee is exactly that, Just a guarantee. If they default then Ottawa (the taxpayer is on the hook). Yet they did not. Please make sure to note all the information. Likewise, they were profitable this quarter with $261 million and made and operating profit. Like many airlines similarly in the US, they experienced the exact same thing and were in bankruptcy (CO, US, United, Delta to name a few). They received guarantees from different levels of govenrment.
So why should Ottawa take taxpayer's money at risk for a supposedly private company with operational problems? The problem is not resolved because AC didn't draw down everything and left the taxpayer to pay the bill, but the fact that they could do it, and Ottawa let them.

Meanwhile, while you jump all over a quarterly profit, the fact is, in 2009, 2008, 2006, they ran full-year losses. Unless you tell me Ottawa's guarantee was offered when AC was profitable, which is quite contradictory when you think about it, I'd say this airline hasn't been doing well over the past few years.
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Old November 12th, 2010, 05:20 PM   #1569
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Originally Posted by hkskyline View Post
So why should Ottawa take taxpayer's money at risk for a supposedly private company with operational problems? The problem is not resolved because AC didn't draw down everything and left the taxpayer to pay the bill, but the fact that they could do it, and Ottawa let them.

Meanwhile, while you jump all over a quarterly profit, the fact is, in 2009, 2008, 2006, they ran full-year losses. Unless you tell me Ottawa's guarantee was offered when AC was profitable, which is quite contradictory when you think about it, I'd say this airline hasn't been doing well over the past few years.
First of all, the loan guarantee was when they were in bankruptcy. Not now and currently they do not have any guarantees that they can draw down on from Ottawa.

Secondly, I did not jump all over quarterly profits, you mentioned it first. I said that they made a profit this quarter...and take a look at the industry in NA as a whole for the past few years. Please find me a legacy carrier that was tossing out profits on an annual/quarterly basis? There were not too many. You do remember this thing called a recession from 2008/09?

Why should the UAE take money and spend it on EK? Let them go it on their own with the business model and get no state sponsorship.
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Old November 12th, 2010, 05:49 PM   #1570
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First of all, the loan guarantee was when they were in bankruptcy. Not now and currently they do not have any guarantees that they can draw down on from Ottawa.

Secondly, I did not jump all over quarterly profits, you mentioned it first. I said that they made a profit this quarter...and take a look at the industry in NA as a whole for the past few years. Please find me a legacy carrier that was tossing out profits on an annual/quarterly basis? There were not too many. You do remember this thing called a recession from 2008/09?

Why should the UAE take money and spend it on EK? Let them go it on their own with the business model and get no state sponsorship.
Well of course you issue loan guarantees at times of crisis. But my point is the Canadian government is heavily involved in AC despite the supposed privatization long ago. The reason is AC serves the government mandate to keep smaller communities across the sparsely-populated country connected, despite the lack of economic feasibility to run these flights. This is even more heavy intervention than the UAE negotiating for more flights for Emirates and free airport concessions. So far I don't see the UAE actually pumping money into EK's operations, but Ottawa would most certainly do so through its loan guarantee.

The recession came at the end of 2008. So could part of the last quarter wipe out all the results from the other 9 months of the year? What about 2006? The fact is, AC has not been historically profitable in recent history.
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Old November 12th, 2010, 05:49 PM   #1571
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Actually, it's not EK that negotiates expansion and slots. It's the UAE. Note Qatar is getting no more, no less than what Emirates has right now. Considering Qatar is even smaller than the UAE, I wonder why both countries are allocated the same frequencies?
I'm well aware of the fact that EK doesn't negotiate air agreements - thanks for pointing out the smallest of technicalities. And thank you for proving my point further - yes Qatar is smaller than the UAE but Beijing is substantially larger than both combined and Hainan Airlines was only offered 3 flights per week. Egypt, Turkey, they're all bigger than both and were offered 3 flights per week. That's been Ottawa's rule since the beginning so why should the UAE be allowed to muscle in at a more aggressive rate than anyone else. This has also been stated a number of times (here and in other threads) that EK could have taken the original 6 flights per week that were on the table but they didn't so EY took 3 and EK realizing that they missed the boat a bit jumped on the other 3.

I'll have to dig up the article where I read that UAE buys empty seats on EK flights (maybe not all flights and maybe they don't do it as much now as they did in the past but believe me it happened).
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Old November 12th, 2010, 05:59 PM   #1572
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I'm well aware of the fact that EK doesn't negotiate air agreements - thanks for pointing out the smallest of technicalities. And thank you for proving my point further - yes Qatar is smaller than the UAE but Beijing is substantially larger than both combined and Hainan Airlines was only offered 3 flights per week. Egypt, Turkey, they're all bigger than both and were offered 3 flights per week. That's been Ottawa's rule since the beginning so why should the UAE be allowed to muscle in at a more aggressive rate than anyone else. This has also been stated a number of times (here and in other threads) that EK could have taken the original 6 flights per week that were on the table but they didn't so EY took 3 and EK realizing that they missed the boat a bit jumped on the other 3.

I'll have to dig up the article where I read that UAE buys empty seats on EK flights (maybe not all flights and maybe they don't do it as much now as they did in the past but believe me it happened).
Qatar is transfer traffic and Beijing is end-point traffic. Transfer traffic opens up the market to much more traffic possibilities and hence frequencies. Likewise, Egypt and Turkey are not likely transfer markets hence lower frequencies are sufficient. EK wouldn't even fly to Toronto had it not been the transfer possibilities. Bilateral trade with Canada is probably not enough to sustain a daily flight, and Dubai isn't the world's most popular tourism destination anyway.

You really need to understand where the traffic is coming from and why to tie that to the frequencies. I'm not at all surprised EK wanted more frequencies whereas even if AC was given the same rights, they'll never take full advantage of it since AC would do end-point to Dubai, not transfer. Filling up an AC plane without a strong partner in Dubai for onward connections would prove very difficult.
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Old November 12th, 2010, 06:05 PM   #1573
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Well of course you issue loan guarantees at times of crisis. But my point is the Canadian government is heavily involved in AC despite the supposed privatization long ago. The reason is AC serves the government mandate to keep smaller communities across the sparsely-populated country connected, despite the lack of economic feasibility to run these flights. This is even more heavy intervention than the UAE negotiating for more flights for Emirates and free airport concessions. So far I don't see the UAE actually pumping money into EK's operations, but Ottawa would most certainly do so through its loan guarantee.

The recession came at the end of 2008. So could part of the last quarter wipe out all the results from the other 9 months of the year? What about 2006? The fact is, AC has not been historically profitable in recent history.
Likewise the UAE is involved in EK. Wherther it is in times of crisis or not, so is the Cdn govt. So, it is a moot point.

And how is it that you know the UAE does not pump money into EK's operations? Can you please provide me proof of that? Sorry, I had to do that. All in good fun.

Anyhow, the recession came before the end of 2008. It started mid to late 2008 with signs of a slowing economy prior to that. I am not going to sit here and tell you that AC is and has been a profitable going concern. There are circumstances that do not allow it to be. But then again, we have been through this before and I am not going to re-hash it.

And lets not compare intervention tactics because from where I stand, ejecting a country from a milirary base and not allowing a minister to overfly then slapping on visa's on the country population does not seem heavy handed intervention, then I don't know what is.
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Old November 12th, 2010, 06:14 PM   #1574
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Likewise the UAE is involved in EK. Wherther it is in times of crisis or not, so is the Cdn govt. So, it is a moot point.

And how is it that you know the UAE does not pump money into EK's operations? Can you please provide me proof of that? Sorry, I had to do that. All in good fun.
I think it's the other way around. You need to show me proof that the UAE government is giving EK cash. Because we all know Ottawa gave and would give AC cash so it won't go under at times of need. Hence, the Canadians are far more interventionist, and AC is far more susceptible to losses than UAE/EK. So far I have only seen the UAE give airport concessions and a strong negotiating team for frequencies. AC has asked Ottawa to lower airport rent before as well.

I'm not saying government intervention justifies the UAE's reaction. But what I am trying to point out is Ottawa is even worse in intervening to keep AC up and running, although they haven't resorted to the tactics the UAE has taken.
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Old November 12th, 2010, 06:22 PM   #1575
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I think it's the other way around. You need to show me proof that the UAE government is giving EK cash. Because we all know Ottawa gave and would give AC cash so it won't go under at times of need. Hence, the Canadians are far more interventionist, and AC is far more susceptible to losses than UAE/EK. So far I have only seen the UAE give airport concessions and a strong negotiating team for frequencies. AC has asked Ottawa to lower airport rent before as well.

I'm not saying government intervention justifies the UAE's reaction. But what I am trying to point out is Ottawa is even worse in intervening to keep AC up and running, although they haven't resorted to the tactics the UAE has taken.
Actually, I don't need too because the fact is that EK gets the aircraft financing backed by the UAE. AC does not get that. And the fact that we know AC has received support because it is publically known.

The point is that none is in a position to say the other is at fault when both do the same thing. I certainly don't think that anyone can point a finger and say which is worse. Sh*t is sh*t anyway you look at it. Just because one smells worse does not diminish the fact that it is still sh*t.
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Old November 12th, 2010, 06:28 PM   #1576
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Actually, I don't need too because the fact is that EK gets the aircraft financing backed by the UAE. AC does not get that. And the fact that we know AC has received support because it is publically known.

The point is that none is in a position to say the other is at fault when both do the same thing. I certainly don't think that anyone can point a finger and say which is worse. Sh*t is sh*t anyway you look at it. Just because one smells worse does not diminish the fact that it is still sh*t.
Financing? Does that mean EK doesn't pay need to pay it back? Or they have to pay it back like AC needs to pay back Ottawa with interest for the loans it takes?

Yes, both are guilty of being interventionist. My point is anyone who thinks EK needs to be stopped from expanding because the UAE helps them out should think twice because any other foreign government can catch AC for the same thing!
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Old November 12th, 2010, 06:50 PM   #1577
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Financing? Does that mean EK doesn't pay need to pay it back? Or they have to pay it back like AC needs to pay back Ottawa with interest for the loans it takes?

Yes, both are guilty of being interventionist. My point is anyone who thinks EK needs to be stopped from expanding because the UAE helps them out should think twice because any other foreign government can catch AC for the same thing!
The point is that if the appropriate channels were followed, and they could prove it like THY or any other airline that has recently gained access to Canada, that they would be more than happy to open up more slots. If you cry wolf too many times, the last time that you do, no one will listen.

Case in point, now many other countries and airlines are looking more closely at what EK has been doing. So, who hurts in the end? Not AC or Canada. We still have airlines wanting to fly in here and start service.
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Old November 12th, 2010, 07:55 PM   #1578
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Qatar is transfer traffic and Beijing is end-point traffic. Transfer traffic opens up the market to much more traffic possibilities and hence frequencies. Likewise, Egypt and Turkey are not likely transfer markets hence lower frequencies are sufficient. EK wouldn't even fly to Toronto had it not been the transfer possibilities. Bilateral trade with Canada is probably not enough to sustain a daily flight, and Dubai isn't the world's most popular tourism destination anyway.

You really need to understand where the traffic is coming from and why to tie that to the frequencies. I'm not at all surprised EK wanted more frequencies whereas even if AC was given the same rights, they'll never take full advantage of it since AC would do end-point to Dubai, not transfer. Filling up an AC plane without a strong partner in Dubai for onward connections would prove very difficult.
Don't kid yourself, THY is flying full planes from YYZ because of transfer traffic and MS's objective to fly into YYZ is the same...there's a reason why MS into YUL didn't work very well - it was purly based on point to point leisure travel during peak periods. Same thing with Ehiopian when they start, that's all about about through traffic. I'll concede that YYZ-PEK is point to point traffic but even with that, and given that Canada and China are MUCH bigger trading partners than Canada and the UAE, Hainan could cry foul over only having 3 flights a week but they don't. They're following the proper process...go figure.
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Old November 12th, 2010, 07:57 PM   #1579
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Originally Posted by Toronto_41 View Post
The point is that if the appropriate channels were followed, and they could prove it like THY or any other airline that has recently gained access to Canada, that they would be more than happy to open up more slots. If you cry wolf too many times, the last time that you do, no one will listen.

Case in point, now many other countries and airlines are looking more closely at what EK has been doing. So, who hurts in the end? Not AC or Canada. We still have airlines wanting to fly in here and start service.
Quote:
The point is that if the appropriate channels were followed, and they could prove it like THY or any other airline that has recently gained access to Canada, that they would be more than happy to open up more slots. If you cry wolf too many times, the last time that you do, no one will listen.
I'm not sure how many more times you or I can say this before it registers...
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Old November 12th, 2010, 08:42 PM   #1580
ACT7
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Article: Emirates Airline: "Busting Myths" about Air Canada

http://www.cbc.ca/politics/insidepol...ir-canada.html

Still touting wanting access to YVR and YYC.
I will say this...comparing the open skies agreement with Switzerland is interesting but there is obviously something more behind the scenes that isn't being made public because allowing Turkish, Egyptair, Ethiopian and Qatar to gain access doesn't exactly reek of protectionism.
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