Canada May Ease Foreign Ownership Rules in Airlines

Post by : Amit

Photo:Reuters 

Ottawa, June 2025 — In a move that could reshape Canada’s aviation landscape, the Competition Bureau of Canada has urged the federal government to relax its long-standing restrictions on foreign ownership of domestic airlines. The recommendation, revealed in a comprehensive report released this week, suggests allowing 100% foreign ownership of carriers operating exclusively within Canada — a shift modeled after Australia's aviation policy.

The Bureau also proposes raising the cap on individual foreign investor stakes from 25% to 49%, aligning it with the current total cap on all foreign voting shares. The proposal comes amid growing concern over limited competition, high airfares, and customer dissatisfaction across Canada’s air travel sector. With Air Canada and WestJet dominating between 50% and 75% of the domestic market, the Bureau believes opening the doors to international investors could inject much-needed competition, capital, and innovation. Commissioner Matthew Boswell emphasized that in a country with a vast geography and a population of over 41 million, air travel is not just a convenience but a necessity. “More competition in the industry will mean lower prices, better services, and improved productivity,” he said. However, the proposal is not without pushback. Industry groups and labor unions have voiced concern that increased foreign ownership could reroute traffic through U.S. hubs, put Canadian jobs at risk, and reduce air connectivity to underserved or remote regions.

The recommendations stem from a year-long market study launched in mid-2024, which examined the structural barriers affecting the industry, particularly the cost of service, access to routes, and the impact of consolidation. The timing of the report is significant, as Canadians have faced steadily rising ticket prices, limited airline choice, and frequent service disruptions. While Air Canada and WestJet have not yet publicly commented on the recommendations, both carriers are expected to play a central role in the national debate going forward. The final decision on whether to adopt the reforms will rest with the federal government once the Competition Bureau releases its full report by the end of June 2025.

The Competition Bureau of Canada has proposed a significant change to the country’s aviation policy by recommending the federal government allow up to 100% foreign ownership of domestic-only airlines. Currently, foreign investors are limited to owning no more than 25% of a Canadian carrier individually, and the Bureau suggests increasing this threshold to 49%, aligning it with the existing overall cap on foreign voting shares.

The goal of this proposed change is to inject fresh capital into the sector, stimulate greater competition, and improve the overall quality of service available to Canadian travelers. This recommendation comes in response to ongoing concerns about the lack of competition in Canada’s air travel market, which is largely dominated by Air Canada and WestJet, together controlling between 50% and 75% of the domestic passenger share.

However, the proposal has raised some flags among labor groups and industry watchers, who fear that allowing greater foreign control could lead to job losses, weaken Canadian regulatory oversight, and reduce essential services to smaller or remote communities that rely heavily on air travel. The recommendation is the result of a comprehensive year-long investigation into the structural challenges facing the Canadian airline industry, particularly around affordability, barriers to market entry, and the rising frustration among consumers over high fares and limited choice. The Bureau’s final report is expected to be released by June 2025, after which the federal government will decide whether to adopt the reforms and make legislative changes that could open the skies to new international investors and operators.

foreign airlines Canada