Canada allows more foreign investment in airlines, wants competition

Thu Nov 3, 2016 4:18pm EDT
 
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By Allison Lampert

MONTREAL (Reuters) - Canada will lift foreign investment limits for Canadian airlines to 49 percent from 25 percent, a change that should spur competition and lower fares by encouraging the launch of low-cost airlines, its transport minister said on Thursday.

Air Canada shares fell 3.2 percent while WestJet Airlines Ltd slipped 1.4 percent following the news, though analysts said a flood of new low-cost competitors is unlikely given the country's high aviation taxes and charges.

Consumer advocates have long complained that limited competition, high fares and airport fees make Canada a comparatively expensive country for air travel.

"I expect fares to go down because of competition, and I expect more destination choices for Canadians," Transport Minister Marc Garneau said in Montreal.

The rules still prohibit a foreign individual or single group of international investors from owning more than 25 percent of a Canadian carrier.

WestJet Chief Executive Gregg Saretsky said the airline was disappointed the Canadian government had not done more to review aviation taxation and aviation infrastructure costs. Air Canada also called on the government to address high Canadian ticket taxes and other fees.

Garneau told reporters he would look at airport rents and security fees but made no commitments.

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Canada's Transport Minister Marc Garneau speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Canada, March 21, 2016. REUTERS/Chris Wattie