New Zealand is at the forefront of a new era in international air services with the signing of the Multilateral Agreement on the Liberalization of International Air Transportation, Transport Minister Mark Gosche and Trade Negotiations Minister Jim Sutton said today.

The "open skies" agreement was signed in Washington DC by Mr Sutton at 6am today New Zealand time (2pm yesterday, Washington DC time).

The agreement links Brunei Darussalam, Chile, New Zealand, Singapore and the United States of America, in a move which will benefit New Zealand travellers and traders.

"The Agreement signed today replaces the various 'open skies' bilateral agreements in place between the five signatories," Mr Gosche said.

"Air service rights have traditionally been traded on a strictly bilateral basis, which is a relatively inefficient mechanism. The new agreement enables such rights to be exchanged among a group of countries, giving airlines the opportunity for greater flexibility in the range of services they can provide. Airlines are then better able to match their services to the needs of their customers."

Mr Gosche said New Zealand's most significant achievement in the negotiation of the Multilateral Agreement was to secure flexible airline ownership provisions that were consistent with New Zealand's international air transport policy.

"By easing the ownership requirements contained in traditional bilateral agreements, airlines will have improved access to capital markets. In countries such as New Zealand, with small capital markets, the ability for airlines to access finance from offshore sources is important to their sustained ability to offer modern and efficient services."

He said the next task would be to encourage others to accede to the Agreement as each new member enhances its potential value. New Zealand will be closely involved in this process."

A Protocol to the Agreement, signed by New Zealand, provides for additional opportunities.

For example, the protocol would enable a New Zealand airline to set up in Singapore and from there operate passenger services to third countries that had exchanged the same rights with New Zealand, with no requirement that they touch New Zealand.

As well, it enables airlines to carry passengers on domestic sectors where these form part of an international service.

Mr Sutton said good airlinks were crucial for enhanced trade.

New Zealand is the depository state for the Agreement which will mean an ongoing role in its implementation. This is one of only a handful of international agreements for which New Zealand is the depository.

The agreement will come into full force once it is ratified by Parliament.

Office of Hon Jim Sutton

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