India and Canada have agreed to liberalise their current bilateral air transport agreement, effective immediately, allowing a five-fold increase in passenger flights between the two countries.

Canada's International Trade Minister Jim Peterson and Transport Minister Jean-C Lapierre made this announcement on Wednesday.

Previously, the agreement governing air services between Canada and India limited the number of air carriers that could serve the market; restricted total capacity to approximately seven round-trip flights per week for each country; confined Indian carriers' effective access to cities in Canada to Montreal and Toronto, and Canadian carriers' access to Indian cities to Delhi and Mumbai; and did not provide for the kind of flexible marketing arrangements, such as code-sharing, that have become prevalent in recent years.

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The new agreement, however, seeks to address the shortcomings of the previous pact.

"This agreement will help facilitate and encourage our rapidly growing commercial and scientific ties with India," Peterson said in a statement.

"The extended air services will also spur tourism and cultural exchanges, which will benefit both countries."

"This new arrangement will allow airlines of Canada and India to better meet the needs of the travelling public, including the business community, and reflects a shared commitment to improved air services between the two countries," Lapierre said.

Highlights of the new agreement

• Weekly capacity for passenger services will increase approximately five-fold to 35 round-trip flights per week for each country.
• Each country can designate as many air carriers as it wishes for flights between Canada and India.
• Canadian air carriers can access the cities of Bangalore, Chennai, Hyderabad, Kolkata, Mumbai and Delhi.
• Indian carriers can access Edmonton, Vancouver and two other cities to be named by India, in addition to Montreal and Toronto.
• Airlines of both countries will be able to take advantage of new code-share provisions whereby an airline sells seats in its name on the flights of another airline.
• Capacity for all-cargo services is unlimited.
• The new agreement sets the stage for the growth of Canada-India air services and is consistent with Canada's International Policy Statement objective of creating sustainable long-term relationships with new economic powers.

The active promotion of trade and investment by both countries has resulted in a record merchandise bilateral trade valued at about $2.45 billion, reflecting a trade relationship that has grown over 60 percent over the past five years.

In light of the potential for rapid expansion of the Canada-India air transport market, the Canadian and Indian negotiating delegations agreed to meet again in 2007, or sooner if necessary, to ensure that the air services agreement continues to be consistent with Canada's trade objectives and meet the needs of the travelling public.