TORIONTO — Canada’s airlines have spoken up following yesterday’s news that the federal government plans to loosen Canada’s strict foreign investment rules for airlines.
During a news briefing at the Chamber of Commerce of Metropolitan Montréal yesterday, Minister of Transport Marc Garneau outlined his ‘Transportation 2030’ strategy to over 550 key transportation stakeholders from across the country.
The strategy entails several key components, including pursuing legislation to provide greater transparency and fairness for Canada’s air traveller, working with Canadian Air Transport Security Authority (CATSA) to ensure faster security checkpoints at Canadian airports, and changing legislation to change international ownership restrictions from 25% to 49% of voting interests for Canadian air carriers.
Garneau said loosening Canada’s foreign investment rules for airlines will spur competition and allow the launch of low-cost carriers. “This can bring down airfares and it can also provide more destinations and more choice for consumers,” he said.
Until the legislation is changed, Garneau said he is granting exemptions that will allow aspiring discount airlines Canada Jetlines and Enerjet to land more international investors.
Canada Jetlines CEO Jim Scott said the move will allow the Vancouver-based company to lock up investors so it can launch service next summer.
“Canada is the only G7 country that has not brought this airline model into its network,” he said.
Analyst Walter Spracklin of RBC Capital Markets said the change in ownership limits could allow start ups to pressure Air Canada and WestJet on domestic fares, but won’t have a “meaningful impact” on the competitive environment in Canada.
Air Canada and WestJet said the top issue facing the airline industry is high fees including airport rents, security surcharges and fuel taxes.
“We recognize and appreciate the extensive consultation that has been undertaken by the federal government over the past year, and we are supportive of many measures announced today,” said Gregg Saretsky, WestJet President and CEO. “However, we firmly believe the largest challenge to ensuring low fares for Canadian consumers is the rising cost of aviation infrastructure. Canada is a much more expensive jurisdiction in which to operate than other jurisdictions. We are disappointed the government has not signaled more clearly a willingness to meaningfully review aviation taxation and cost structure.”
He also said the government should negotiate foreign ownership limits with other countries instead of adopting a unilateral increase.
With file from The Canadian Press