updated 12/17/2009 1:53:43 PM ET 2009-12-17T18:53:43

The European Union on Thursday signed an aviation deal with Canada that will allow airlines to operate flights from any European city to Canada and will phase out restrictions on foreign ownership of carriers.

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The deal replaces a patchwork of agreements between Canada and most — but not all — of the EU's 27 nations that prevented one EU country's flagship airline from running flights from another part of Europe to Canada.

This meant, for example, that British Airlines could only run flights from Britain to Canada. That's no longer the case now and airlines can operate direct flights to Canada from any part of Europe. The deal also removes all restrictions on routes, prices or the number of weekly flights between the two regions.

The EU's executive commission said the deal could generate economic benefits of at least (EURO)72 million ($105 million) and create more than 1,000 jobs in the first year.

It said opening up the market could see an extra 3.5 million people fly between the two regions in coming years. More than 9 million people traveled between Canada and the EU last year.

The new agreement made the EU-Canada air transport market "one of the most open in the world," said Antonio Tajani, the EU's transport commissioner. The EU is hoping to expand a similar deal with the U.S., which is reluctant to drop barriers to foreign investment in airlines.

Limits on investment will be phased out gradually.

"The end product will be that EU undertakings or citizens will be able to freely invest in Canadian airlines and vice versa," the EU said.

The deal also recognizes security checks in both regions which should simplify flight transfers because passengers, luggage or cargo taking a connecting flight would be exempted from a second round of security screening.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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