Canada mulls easing airline ownership rules

Mon Feb 9, 2009 5:37pm EST
 

OTTAWA (Reuters) - Canada's Conservative government came under fire from opposition legislators on Monday over plans to raise foreign ownership limits on domestic airlines, including Air Canada, the country's largest carrier.

The minority government included the ownership changes in a budget implementation bill it introduced on Friday, following plans announced in September during the election campaign.

The separatist Bloc Quebecois and the leftist New Democratic Party both objected to the move, but do not have enough votes in the House of Commons to block the measure, since the main opposition Liberal Party will be backing it.

Under the planned changes, Ottawa would be authorized to increase foreign ownership limits to 49 percent from 25 percent, a move that Air Canada, once government-owned, said in September that it welcomed.

Under the proposed arrangement, there would have to be reciprocal agreement with the foreign investor's home country before any increased investment would be allowed, the Transport Ministry said.

Member of Parliament Robert Bouchard of the Bloc Quebecois criticized the idea of allowing higher foreign ownership of airlines. He also criticized a separate measure that would raise the threshold for a government review of foreign investments to transactions worth C$1 billion ($820 million) over four years from the current C$295 million.

"How can the industry minister subscribe to such blind deregulation when we see the dramatic effects of such an approach in the United States?" Bouchard asked in the House of Commons.

Industry Minister Tony Clement replied that "Canadian business must stay competitive in today's global economy." He added that the bill, which has yet to pass, would assure that foreign investments do not jeopardize national security.

Liberal Member of Parliament John McCallum said in a time of recession it was useful for Air Canada to have access to foreign capital if necessary.

($1=$1.22 Canadian)

(Reporting by Randall Palmer; editing by Rob Wilson)