Canada should allow increased airline foreign ownership -study

OTTAWA, Feb 25 (Reuters) - Ottawa should raise current foreign-ownership limits on airlines to boost competition and encourage new entrants into the market, a study for the Canadian government recommended on Thursday.

The review, which sought to identify priorities for modernizing Canadian transportation laws, recommended the government increase foreign ownership limits to at least 49 percent from 25 percent for air carriers providing commercial passenger services.

“Our goal is to see Canada join most other large aviation markets in allowing significant (but not full) foreign ownership of passenger air carriers,” the report said.

“These changes should contribute to narrowing the gap between Canada and other markets in terms of our relatively low level of competition and our relatively high airfares.”

For airlines operating all-freight and specialty air services, foreign ownership limits should be increased to 100 percent, the study said.

The government should also level the playing field for new entrants and growing carriers by ensuring that regulations for granting licenses and air operator certificates are consistent, the report said.

Shares of Air Canada closed up 1.5 percent at C$7.26, while those of WestJet ended down 0.7 percent at C$16.19. (Reporting by Leah Schnurr)