No. H 139/07
For release July 18, 2007

CANADA'S NEW GOVERNMENT ANNOUNCES
BLUE SKY AGREEMENT WITH THE REPUBLIC OF ICELAND

OTTAWA — The Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities, today announced the first Open Skies agreement with the Republic of Iceland, under the Government of Canada's Blue Sky policy.

The new agreement allows airlines of both countries to operate passenger and all-cargo scheduled air services between any city in Canada and Iceland. Canadian carriers will also be allowed to use Iceland as a platform to serve a third country and vice-versa.

"I am pleased that a new air services agreement has been reached with the Republic of Iceland," said Minister Cannon. "This latest agreement under our Blue Sky policy marks another step towards greater choice and flexibility for Canadian travellers, while connecting them to the world."

The new agreement replaces the Memorandum of Understanding on Air Services that has allowed air services to Canada by Icelandair since 1995.

"This Blue Sky agreement will complement the recent free trade agreement signed with Iceland and other countries of the European Free Trade Association, and will help facilitate stronger business ties and enhance tourism between Canada and Iceland," said the Honourable David Emerson, Minister of International Trade. "This should also lead to more international services for travellers, shippers and businesses."

"Icelandair has operated commercial air services to Halifax over a decade," said the Honourable Peter MacKay, Minister of Foreign Affairs and Minister of the Atlantic Canada Opportunities Agency. "I am very pleased that Icelandair has made a strong, long-term commitment to maintain and further develop its international air services in Atlantic Canada."

On June 7, 2007, Canada successfully concluded free trade negotiations with the European Free Trade Association countries of Iceland, Norway, Switzerland and Liechtenstein. The free trade agreement will provide Canadian businesses with a distinct competitive advantage by providing preferential access to these important markets. The Canada-Iceland Blue Sky agreement will complement this free trade agreement by facilitating the circulation of travellers and cargo between the two countries.

Beginning in summer 2008, the carrier intends to expand its seasonal air service to year-round scheduled service to Halifax.

While the new agreement is now in effect, no new air services are likely to be introduced immediately by airlines of either country.

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