Watchdog recommends up to 100% foreign airline ownership amid low competition

Canada should allow 100 per cent foreign ownership of domestic-only airlines, the Competition Bureau says in a new report highlighting the country's "highly concentrated" aviation industry.

In a market study released Thursday, the watchdog suggested creating a new class of airline that operates only in Canada but could have owners from outside its borders, opening the gate to global expertise — and cash.

The current foreign ownership cap sits 49 per cent. In addition, no more than 25 per cent of a carrier can be owned by any one foreign entity, a proportion the Competition Bureau proposed raising to nearly half.

"Allowing more foreign investment in Canadian airlines improves access to capital, drives growth and promotes competition," the report said.

Low competition in the airline industry remains a big hurdle to lower prices and better service across the country, and remote communities especially, the report found.

“Competition in Canada’s airline sector has struggled to take off,” it said, noting consumers’ dissatisfaction with fares, flight options and service quality.

Air Canada and WestJet together account for between half and three-quarters of all domestic passengers at major airports, according to the study.