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Canada's competition bureau wants to open domestic routes to foreign airlines
In a market study report released June 19, Competition Bureau Canada recommended that the country open domestic flying to international airlines.
The bureau also suggests that domestic-only airlines be allowed to be fully owned by international interests. And it recommended that Canada's limit of 25% ownership of Canadian airlines by a single investor be increased to 49%.
"Allowing more foreign investment in Canadian airlines improves access to capital, drives growth, and promotes competition," the bureau said.
The recommendations are among a variety of measures the bureau is suggesting to improve airline competition in what it views as the highly concentrated Canadian market.
Air Canada had 34% of the domestic Canadian passenger share in 2023, the bureau said, followed by WestJet with 30%. Flair and Porter airlines are by far the two next largest carriers, with a combined market share of 19%.
The report, however, does note that market concentration decreased across major Canadian airports from 2019 to 2023, with Flair, Porter and other airlines grabbing share from Air Canada and WestJet.
Air Canada responded to the Competition Bureau report with its own slide show on Canadian airline competition.
"Competition in Canada is as robust, if not more, than other jurisdictions," the airline said. In a series of pie charts, it showed Canada's domestic market against more concentrated markets, such as Australia, France and India.
Air Canada said that if Canadian air travel fees and taxes were reduced 12.5%, to the U.S. level, it would spur 10.7% more demand.
In May, Delta and Air France-KLM announced a WestJet investment. Delta agreed to purchase a 15% stake in the Canadian carrier. Upon closing, Delta plans to sell a 2.3% WestJet stake to Air France-KLM. Once both transactions are completed, Delta's investment in WestJet will amount to $280 million and Air France-KLM's $50 million.
