Canada to increase limits on airline foreign ownership

Canada will nearly double its limit on foreign ownership of airlines as part of an overhaul of transportation rules, raising it to 49% from 25% while retaining other restrictions. Transport Minister Marc Garneau announced the changes in Montreal Thursday, saying the government would immediately increase the ownership threshold to 49% for Canada Jetlines and Enerjet even before enabling legislation to permanently raise the limit. No time-line was given for the legislation. The airline ownership rules are being changed “in order to increase competition and create more options for Canadians,” Garneau said Thursday. The changes come with caveats. A single international investor will not be able to hold more than 25% of voting interests, and no combination of international carriers could own more than 25% of a Canadian competitor. Canada will also retain the current 25% foreign ownership limit for specialty air services. “The biggest impact from the new rules will be from the potential start-up of one or two new ultra-low-cost carriers in Canada,” Cam Doerksen, a National Bank Financial analyst in Montreal, said in a note to clients. Two more such carriers could create overlap and pricing pressure for WestJet and Air Canada. The exemption announced by Garneau will allow “access necessary capital in order to begin operations,” according to a statement from Canada Jetlines on Thursday. Once it starts operating, the airline plans to buy new aircraft, CEO Jim Scott said. <br/>