Canada May Raise Airline Foreign Ownership to Boost Competition

Canada’s Competition Bureau has recommended easing restrictions on foreign ownership in the airline sector to improve competitiveness and financial viability. The proposal suggests increasing the single-investor foreign ownership limit in Canadian airlines from 25% to 49%, which could enhance access to capital, support airline growth, and foster stronger competition.

The report also advocates creating a new class of airline focused solely on domestic flights, with eligibility for up to 100% foreign ownership. This would allow international investors to enter the Canadian market without operating international services, potentially increasing options and lowering prices for domestic travelers.

Additionally, the bureau recommends gradually removing restrictions on foreign ownership altogether and introducing cabotage rights, which would allow foreign carriers to operate domestic routes within Canada. These changes aim to address the concentration in Canada’s aviation market, where Air Canada and WestJet control a dominant share—ranging from 50% to 75% of domestic passenger traffic.

The bureau’s recommendations come amid a wave of recent airline shutdowns, including Lynx Air and Canada Jetlines, highlighting the difficulty new entrants face in surviving long term. By lowering barriers to entry and increasing funding sources, the changes could make the industry more dynamic and resilient.

Air Canada, however, pushed back against the report, stating that claims about a lack of competition in Canadian aviation are unfounded and that smaller airlines can succeed despite the current market structure.

The proposed reforms are now under consideration and could reshape Canada’s airline landscape if adopted.

Related News: https://airguide.info/category/air-travel-business/airline-finance/

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com