Allowing foreign companies to take increased ownership stakes in Canadian passenger airlines will make air travel cheaper for consumers and help create more competition, Transport Minister Marc Garneau says.
Mr. Garneau announced on Thursday that the Liberal government plans to introduce legislation to ease foreign ownership restrictions on domestic airlines to 49 per cent from the current 25 per cent.
He also said that exemptions will be issued to two upstart airlines – Canada Jetlines Inc. and Enerjet – so that they can benefit immediately from the easing of foreign ownership restrictions.
“I expect fares to go down” as a result of increased competition resulting from the easing of the rules, Mr. Garneau said at a news conference after his presentation on the government’s new transportation policy to the Chamber of Commerce of Metropolitan Montreal.
“I expect that, as new carriers come into the field, the measures announced today will allow that to happen. This can bring down airfares but also provide more destinations and more choice to passengers.”
The new rules, however, will ensure that no foreign investor or group of foreign investors can have more than a 25-per-cent ownership stake.
Mr. Garneau also announced plans for a bill of rights that clearly spells out airline responsibility and passenger compensation in cases of overbooking or lost luggage, as well as measures to eliminate long waits at airport security points.
An Air Canada official said it’s too soon to comment on the foreign-ownership change as well as the exemption for the two upstarts. “We really have to examine it,” she said, adding that the carrier is in favour of anything that reduces costs to the consumer.
Asked whether Air Canada might be opposed to the changes and the potential for increased competition, Mr. Garneau replied: “Air Canada has not expressed anything to me. They understand it’s important for Canadians to expect competition so I don’t expect any problem.”
Porter Airlines chief executive Robert Deluce, who was at the the Chamber of Commerce breakfast Thursday, told reporters the changes don’t make much difference for his airline, which has a solid balance sheet, but that “for some new carriers, it might in fact give them a little more opportunity to access financing.”
Last summer, Vancouver-based ultra-low-cost startup Canada Jetlines asked Ottawa for an exemption to the 25-per-cent limit on foreign investment. Earlier this year, a review of Canada’s Transportation Act by former federal cabinet minister David Emerson said the government should allow foreign ownership of up to 49 per cent.
Canada Jetlines said it had identified investors ready to help it get off the ground but that the limits on foreign investment need to be eased.
Canada Jetlines also said it is prepared to buy 24 Bombardier Inc. C Series airliners to serve its initial needs and another 16 of the new jets for later expansion.
Mr. Garneau said on Thursday the decision to ease the restrictions has nothing to do with helping Bombardier sell its C Series jets, which have experienced delays and slow sales.
The Globe And Mail
