GEOPOLITICS has a nasty way of worming itself into any situation. Take the five-year dispute between Canada and the United Arab Emirates over increased landing rights in Canada for airlines from the UAE. After Canada decided to retain the status quo—six Toronto flights to be shared between Emirates and Etihad Airways—the UAE retaliated by evicting Canadian troops from the Camp Mirage airbase near Dubai, a staging point for troops and supplies on their way to Afghanistan. It had already refused to renew landing rights for Canadian military aircraft after their expiration in September. And on top of that, UAE officials lobbied against Canada's bid for one of the non-permanent seats on the UN Security Council, apparently because of Canada's “protectionist” trade policies and weak support for Arab causes in the region.

The UAE's actions seem heavy-handed, given that the dispute is really a commercial one. On one side are the UAE-based airlines, which want to share daily flights to Toronto and gain entrance to Vancouver and Calgary. Emirates executives have argued that such an expansion could potentially create 2,800 jobs across Canada and generate up to $480m in additional economic activity. Those numbers convinced the premiers of Ontario, Alberta and British Columbia to support the proposal.

On the other side stands Air Canada, which has the most to lose since it's the only major airline in Canada that flies to South Asia and the Middle East. Calvin Rovinescu, the CEO, says there isn't enough traffic between the UAE and Canada to justify increasing flights and that any expansion would benefit the UAE's airlines while hurting Canada's national carrier and its partners. He believes the UAE airlines want to carry Canadians to and from India, Pakistan and other long-haul destinations using Dubai as a hub. And the Canadian government seems to agree—although it reportedly would have agreed to two extra flights to cities other than Toronto or allowed more flights if the number of seats stayed the same. But that concession would not have closed the “huge gap” between the two sides, according to a Canadian government source. Canadian government sources have since said they will not be “blackmailed” by the UAE's decision to close the military base.

It's not just Air Canada that is reacting to the rapid expansion of Middle Eastern airlines. European airlines are preparing to ask the European Union to limit the incursions carriers such as Etihad and Emirates can make onto their home turf, and request changes that will make it easier to get credit to finance the purchase of new aircraft. The latter request is apparently inspired by the government-backed financing that Gulf airlines receive in the form of export credits. “We can't get access to cheap financing that others can, which is effectively a subsidy for airlines who are supposedly in a great state of financial health,” says Andrew Crawley, the director of sales and marketing at British Airways.

Gulf airlines did fare better than many other carriers during the downturn as they were able to capture long-haul connecting traffic from competitors in Europe, the Americas and Asia, according to the International Air Transportation Association. Paul Griffiths, head of Dubai Airports, suggests that the Dubai government merely treats its airlines properly. “The only thing Dubai is guilty of is providing an environment that actually supports aviation,” he said. “Most governments around the world treat aviation as a pariah, choking its growth with costly, misdirected regulation, instead of adopting policies that recognise its considerable socio-economic benefits and support its sustainable growth. They then compound the problem with parasitic forms of taxation that usually flow straight out of the sector.”

Whichever side you believe, now that geopolitical issues are involved it's clear the ride could get bumpy. Who stands to lose most? The travellers.