A report from Canada’s Competition Bureau has urged the country to analyse the possibility of making changes to the foreign ownership limit for Canadian airlines.
In particular, the study recommends increasing the single-investor foreign ownership limit for airlines from 25% to 49%, as it would improve the carriers' access to capital, drive growth, and promote competition.
Additionally, the bureau recommends creating a new class of airline that operates only domestic flights in Canada but can have up to 100% foreign ownership.
Finally, it urges phasing out specific restrictions on airlines having owners from outside Canada and allowing cabotage flights.
The recommendations, among others, were made with the aim of giving a boost to Canada’s airline industry, which is highly concentrated, with two main companies, Air Canada and WestJet, accounting for half to three quarters of all domestic passenger traffic and newcomers having a hard time breaking even and keeping afloat over a long period. The country has recently seen the collapse of several companies, such as Lynx Air and Canada Jetlines.
In a statement of its own, Air Canada said that it is a myth that there is a lack of competition in the Canadian air travel industry, that the market is less competitive than other countries, and that smaller carriers cannot succeed in the country.
