In 1945 it was indicated informally to the government of France that Canada would be prepared to enter into a bilateral air agreement with France based upon an exchange of third and fourth freedom rights, i.e. limited to carriage of traffic between Canada and France but not including carriage of traffic to and from third countries, with the terminals of operation to be Paris and Montreal.

The French government did not pursue the matter at that time indicating, among other reasons, that it wished fifth freedom rights as well, i.e. the right to carry traffic between Canada and third countries and especially between Montreal and Chicago.

The government of France has now expressed a desire to enter into a bilateral agreement for air service between Montreal and Paris, limited to third and fourth freedom rights, subject to a reservation that the exclusion of fifth freedom rights is without prejudice to any fifth freedom rights which may have been received by France from other countries under other bilateral agreements.

From the point of view only of air service much less justification now exists for a bilateral agreement with France than in 1945. At that time no rights had been granted to foreign airlines between Canada and Europe while at present service is provided not only by T.C.A. but by seven foreign airlines, one British, one Netherlands, one Belgian, one Scandinavian and three U.S. companies. In fact there is more capacity available on the North Atlantic between Canada and Europe than is required by the available traffic and any additional service will to some extent reduce the amount available to all, and particularly to T.C.A. which does the largest single business between Canada and Europe on the north Atlantic. T.C.A. has reported that it is not at present interested in extending service to France and the benefits of any agreement with France would, in these circumstances, be one-sided since only a French line would be operating under the agreement (this is equally true of our agreement with Belgium, the Netherlands and Scandinavia). Under the policy approved by Cabinet on April 6, 1949, in regard to bilateral air agreements no case can be made for an agreement with France in the absence of any intention that T.C.A. should serve Paris.

On the other hand, considering the direction of flow of Canadian traffic it is true that next to the United Kingdom, the largest volume of air movement between Canada and Europe is to and from France. In addition it is assumed that considerations of general external policy vis-à-vis France would have a bearing on the decision to be taken.

The question also arises as to the traffic rights that could be made available. Additional trans-Atlantic air service to Montreal, would represent a serious competitive aspect as far as T.C.A. is concerned. Moreover union with Newfoundland has made it desirable to utilize Gander as the major traffic terminal and over recent months new traffic rights have been granted at Gander rather than Montreal. It is normal practice in the interests of national aviation to designate as major terminal a coastal airport such as Gander rather than one far inland such as Montreal. On this basis the three U.S. operators and the Belgian airline were all held to Gander rather than Montreal, while the Scandinavian line which had previously been granted rights in Montreal was persuaded to shift to Gander. Opening of Montreal to another foreign airline might cause complaints from those governments who have been held to Gander rather than Montreal.

The granting of traffic rights at Gander would solely from the point of view of aviation and protection of T.C.A. be preferable to traffic rights at Montreal. It would probably be possible as well to grant France fifth freedom rights at Gander as well as third and fourth freedom since this has been done in the case of the other carriers operating there (excluding however, Canada-United Kingdom traffic). The granting of fifth freedom rights at Montreal would be undesirable and has been refused already to both the United Kingdom and United States. It is understood however that the French may be interested only in Montreal and it is quite possible that they will not be interested in proceeding with an agreement unless granted third and fourth freedom rights there although they have not been sounded out fully on this score.

Decision is required as to whether negotiations with a view to agreement with France should be initiated and if so what traffic rights Canada would be prepared to grant.³

³Le 31 mars 1950, le Cabinet a demandé, au ministère des Affaires extérieures et à celui des Transports d'entreprendre des négociations avec la France au sujet du trafic entre Paris et Montréal.
On March 31, 1950 Cabinet instructed the Department of External Affairs and the Department of Transport to begin negotiations with France for the carriage of traffic between Paris and Montreal.