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For Air Canada, 787 a game changer

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Ottawa is being urged to watch Air Canada’s (ACA.B-T) back until the carrier’s Dreamliner fleet arrives.

The first of Air Canada’s new Boeing 787s won’t be delivered until late 2013 – leaving a two-year window during which the airline will be vulnerable to Emirates’ quest to obtain extra Canadian landing rights, said Fred Lazar, a professor at York University’s Schulich School of Business.

The Dreamliner is important to Air Canada because it’s a fuel-efficient jet capable of travelling much longer distances than comparable-sized planes. Overseas flights that don’t make economic sense today will become viable, partly because the Boeing 787 allows airlines to offer non-stop flights to smaller destinations that would normally entail stopovers.

Emirates deploys the 489-seat, double-decker Airbus A380 on its Toronto-Dubai route, which features three round trips a week. To get from Toronto to such destinations as Mumbai, Emirates customers stop over in Dubai, one of seven sheikdoms in the United Arab Emirates. The airline’s request for more landing rights in Canada has sparked a political storm because Emirates may siphon international passengers away from Air Canada.

But if Ottawa stays the course in denying Emirates the extra landing rights, Air Canada’s expansion plans will be poised for takeoff once the new planes arrive.

“When Air Canada finally takes delivery of the Boeing 787s,” the carrier “should be able to greatly expand its networks,” Lazar wrote in a 98-page report, noting that Toronto’s Pearson International Airport and Vancouver International Airport will be the key Canadian hubs.

Montreal-based Air Canada originally expected to receive its first Dreamliner in 2010. But after a series of delays, five are now scheduled for delivery between the fourth quarter of 2013 and the first half of 2014.

The carrier has placed 37 firm orders for the often-postponed Dreamliner, a jet that’s billed as offering more flexibility in route scheduling, a greater choice of flight times on existing routes and the opportunity for new non-stop overseas destinations.

“These aircraft should have started being delivered last year,” but even with the long delays, Air Canada is fortunate to be in the global line to receive Boeing 787s, Lazar said.

Last year, Emirates issued a report claiming there would be $480-million in annual economic benefits for Canada if Ottawa allowed the foreign carrier to expand in Toronto and introduce service to Vancouver and Calgary.

“The increased passenger traffic to Canada generated by Emirates flights will stimulate Canada’s domestic carriers,” said the study, prepared by InterVistas Consulting Inc. for Emirates.

Emirates declined to comment on the report by Lazar, who has done work for the National Airlines Council of Canada. But earlier this month, InterVistas president Mike Tretheway told the Senate committee on transport that Ottawa is effectively shielding Air Canada’s Star Alliance partner, Germany’s Deutsche Lufthansa AG, from increased competition from Dubai-based Emirates.

“Maybe one explanation is that it is now in Air Canada’s interests to support Lufthansa,” he said, arguing that Emirates should be allowed new landing rights in Canada.

Not everyone is banking that “long, thin routes” will be the prevailing trend. Boeing’s rival Airbus SAS is betting that its much-larger A380 will attract travellers to flights between major hubs such as New York and London.

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