Latest news with #CompetitionBureau
CBC
10 hours ago
- Business
- CBC
Should Canada loosen rules around foreign ownership of its airlines?
The Competition Bureau is calling for changes to improve the competitive landscape in Canada's airline industry, including loosening rules that limit foreign ownership of Canadian airlines. But would it work? We speak with two aviation experts with differing opinions on the issue.
Vancouver Sun
15 hours ago
- Business
- Vancouver Sun
Allow total foreign ownership of domestic-only Canadian airlines: Competition Bureau report
Canada should allow up to 100 per cent foreign ownership of domestic-only airlines in a bid to lower fares and boost flight options, 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 a new class of airline that operates only in Canada but has owners outside its borders, opening the gate to global expertise — and cash. The current foreign ownership cap sits at 49 per cent, with sovereignty and national security often cited as the reason. In addition, no more than 25 per cent of a domestic carrier can be owned by any one foreign entity, a proportion the Competition Bureau proposed raising to nearly half. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. 'Allowing more foreign investment in Canadian airlines improves access to capital, drives growth and promotes competition,' the report said, pointing to Australia and New Zealand as places that permit full outsider ownership of in-country carriers. 'As economist Michael Porter famously put it, unless a firm is forced to compete at home, it will usually lose its competitiveness abroad,' Brad Callaghan, an associate deputy commissioner at the Competition Bureau, said during a press briefing. Weak 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 ticket prices, service quality and range of flight choice. Air Canada and WestJet together account for between half and three-quarters of all domestic passengers at major airports, according to the study. Though competition improved between 2019 and 2023 with the arrival of Flair Airlines and the expansion of Porter Airlines, market concentration remains 'extremely high' and competition from new entrants fragile, the bureau said. 'Many Canadians report that international flights are often cheaper than flights within Canada' — partly due to 'cabotage' rules prohibiting point-to-point trips within Canada by foreign airlines — it noted. The watchdog proposed working with other countries to remove foreign competition restrictions in international agreements. The National Airlines Council of Canada, which represents the country's largest carriers, took issue with that, as did airports. 'Cabotage is not the answer to competition in a country as sparse and large as Canada. A foreign carrier is not going to service our smallest towns and thin volume routes,' said Monette Pasher, president of the Canadian Airports Council, in a release. Some experts agreed, arguing that opening the hatch to foreign operators would invite more competition on big routes but do little for thinly served remote communities or even small cities. 'Would I fly into Yarmouth? Would I fly into Prince Albert? Would I fly into Whitehorse? No, not a chance. There's not enough traffic there,' said John Gradek, who teaches aviation management at McGill University. 'They want the low-hanging fruit … Ottawa to Montreal, Toronto to Calgary, Edmonton to Vancouver, because that's where all the money is.' Gradek said greater access to the Canadian market should come with conditions, such as a commitment to fly certain regional routes — and reciprocal access to markets in those airlines' home countries. Direct government support akin to a per-passenger subsidy on those far-flung routes is another option, said Gabor Lukacs, president of the Air Passenger Rights advocacy group. Western University professor Geraint Harvey warned about 'dysfunctional outcomes' that could arise from new players, especially state-owned carriers like Qatar Airways and Emirates that enjoy hefty subsidies. 'They can hollow out the market — they can dominate certain routes by offering lower fares,' he said, noting that more competition could ultimately result in less, if domestic airlines are elbowed out of the market. The report recommended a basket of reforms that include reviewing the airport funding model, enhancing the role of smaller airports and shoring up service to remote communities, particularly in the North. Currently, airport infrastructure costs fall largely on travellers under a user-pay model. Extra charges such as airport fees, fuel taxes and security and navigation charges comprised 30 cents of every dollar that passengers paid for tickets in 2023 compared with 25 cents in 2019, the study said. 'They are currently biased against smaller airlines,' said Keldon Bester, executive director of the Canadian Anti-Monopoly Project, stressing that high fees put otherwise cheap flights out of reach for demographics that discount carriers rely on. Air Canada spokesman Peter Fitzpatrick said the trend 'highlights how high government fees and charges raise airfares in Canada, hurting consumers and the competitiveness of our industry.' The country's largest airline has said Canada remains at least as competitive as markets such as the United States and European Union and that the share of domestic passengers on markets served by three or more carriers has shot up over the past decade _ though the number of routes has gone down. Over the past 20 months, four low-cost carriers have disappeared from the skies, as Lynx Air and Canada Jetlines shut down and WestJet folded subsidiary Swoop and the recently acquired Sunwing Airlines into its main-line service. Canada is a noted graveyard for budget carriers. Six foundered here between 1995 and 2015: Greyhound Air, Roots Air, Air Canada's Zip, Jetsgo, Zoom Airlines and CanJet. While the country's biggest cities remain amply served, smaller destinations have fewer options, which can also result in higher prices and, when things go awry, stranded passengers. The Calgary-Saskatoon route saw flights fall 39 per cent to 412 last month compared with 673 in May 2019, now that the route between Alberta and Saskatchewan's two biggest cities is served with non-stop flights by only WestJet, according to aviation data firm Cirium. Air Canada pulled out of the route over two years ago. The report noted that routes served by just one airline tended to be more expensive. 'Our research shows that when just one new competitor flies on a route between two cities, airfares go down by nine per cent on average,' the report said. The report also proposed a working group to ramp up service to the North, where air transportation is an 'essential lifeline, even for residents who never fly' but whose food and medicine arrive by plane. It further called for an end to the transport minister's power to green-light mergers and acquisitions deemed anticompetitive by the Competition Bureau. And it urged industry-wide publication of data on delays and cancellations to help consumers make informed choices, on par with the United States and United Kingdom. Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
Edmonton Journal
15 hours ago
- Business
- Edmonton Journal
Allow total foreign ownership of domestic-only Canadian airlines: Competition Bureau report
Article content Canada should allow up to 100 per cent foreign ownership of domestic-only airlines in a bid to lower fares and boost flight options, 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 a new class of airline that operates only in Canada but has owners outside its borders, opening the gate to global expertise — and cash. Article content The current foreign ownership cap sits at 49 per cent, with sovereignty and national security often cited as the reason. In addition, no more than 25 per cent of a domestic 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, pointing to Australia and New Zealand as places that permit full outsider ownership of in-country carriers. 'As economist Michael Porter famously put it, unless a firm is forced to compete at home, it will usually lose its competitiveness abroad,' Brad Callaghan, an associate deputy commissioner at the Competition Bureau, said during a press briefing. Weak 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. Article content 'Competition in Canada's airline sector has struggled to take off,' it said, noting consumers' dissatisfaction with ticket prices, service quality and range of flight choice. Air Canada and WestJet together account for between half and three-quarters of all domestic passengers at major airports, according to the study. Though competition improved between 2019 and 2023 with the arrival of Flair Airlines and the expansion of Porter Airlines, market concentration remains 'extremely high' and competition from new entrants fragile, the bureau said. 'Many Canadians report that international flights are often cheaper than flights within Canada' — partly due to 'cabotage' rules prohibiting point-to-point trips within Canada by foreign airlines — it noted. The watchdog proposed working with other countries to remove foreign competition restrictions in international agreements. Article content The National Airlines Council of Canada, which represents the country's largest carriers, took issue with that, as did airports. 'Cabotage is not the answer to competition in a country as sparse and large as Canada. A foreign carrier is not going to service our smallest towns and thin volume routes,' said Monette Pasher, president of the Canadian Airports Council, in a release. Some experts agreed, arguing that opening the hatch to foreign operators would invite more competition on big routes but do little for thinly served remote communities or even small cities. 'Would I fly into Yarmouth? Would I fly into Prince Albert? Would I fly into Whitehorse? No, not a chance. There's not enough traffic there,' said John Gradek, who teaches aviation management at McGill University. 'They want the low-hanging fruit … Ottawa to Montreal, Toronto to Calgary, Edmonton to Vancouver, because that's where all the money is.' Article content Gradek said greater access to the Canadian market should come with conditions, such as a commitment to fly certain regional routes — and reciprocal access to markets in those airlines' home countries. Direct government support akin to a per-passenger subsidy on those far-flung routes is another option, said Gabor Lukacs, president of the Air Passenger Rights advocacy group. Western University professor Geraint Harvey warned about 'dysfunctional outcomes' that could arise from new players, especially state-owned carriers like Qatar Airways and Emirates that enjoy hefty subsidies. 'They can hollow out the market — they can dominate certain routes by offering lower fares,' he said, noting that more competition could ultimately result in less, if domestic airlines are elbowed out of the market. The report recommended a basket of reforms that include reviewing the airport funding model, enhancing the role of smaller airports and shoring up service to remote communities, particularly in the North. Article content Currently, airport infrastructure costs fall largely on travellers under a user-pay model. Extra charges such as airport fees, fuel taxes and security and navigation charges comprised 30 cents of every dollar that passengers paid for tickets in 2023 compared with 25 cents in 2019, the study said. 'They are currently biased against smaller airlines,' said Keldon Bester, executive director of the Canadian Anti-Monopoly Project, stressing that high fees put otherwise cheap flights out of reach for demographics that discount carriers rely on. Air Canada spokesman Peter Fitzpatrick said the trend 'highlights how high government fees and charges raise airfares in Canada, hurting consumers and the competitiveness of our industry.' The country's largest airline has said Canada remains at least as competitive as markets such as the United States and European Union and that the share of domestic passengers on markets served by three or more carriers has shot up over the past decade _ though the number of routes has gone down. Article content Over the past 20 months, four low-cost carriers have disappeared from the skies, as Lynx Air and Canada Jetlines shut down and WestJet folded subsidiary Swoop and the recently acquired Sunwing Airlines into its main-line service. Canada is a noted graveyard for budget carriers. Six foundered here between 1995 and 2015: Greyhound Air, Roots Air, Air Canada's Zip, Jetsgo, Zoom Airlines and CanJet. While the country's biggest cities remain amply served, smaller destinations have fewer options, which can also result in higher prices and, when things go awry, stranded passengers. The Calgary-Saskatoon route saw flights fall 39 per cent to 412 last month compared with 673 in May 2019, now that the route between Alberta and Saskatchewan's two biggest cities is served with non-stop flights by only WestJet, according to aviation data firm Cirium. Air Canada pulled out of the route over two years ago. Article content The report noted that routes served by just one airline tended to be more expensive. 'Our research shows that when just one new competitor flies on a route between two cities, airfares go down by nine per cent on average,' the report said. The report also proposed a working group to ramp up service to the North, where air transportation is an 'essential lifeline, even for residents who never fly' but whose food and medicine arrive by plane. It further called for an end to the transport minister's power to green-light mergers and acquisitions deemed anticompetitive by the Competition Bureau. And it urged industry-wide publication of data on delays and cancellations to help consumers make informed choices, on par with the United States and United Kingdom. Article content Latest National Stories
National Post
15 hours ago
- Business
- National Post
Allow total foreign ownership of domestic-only Canadian airlines: Competition Bureau report
Canada should allow up to 100 per cent foreign ownership of domestic-only airlines in a bid to lower fares and boost flight options, the Competition Bureau says in a new report highlighting the country's 'highly concentrated' aviation industry. Article content In a market study released Thursday, the watchdog suggested a new class of airline that operates only in Canada but has owners outside its borders, opening the gate to global expertise — and cash. Article content Article content Article content The current foreign ownership cap sits at 49 per cent, with sovereignty and national security often cited as the reason. In addition, no more than 25 per cent of a domestic carrier can be owned by any one foreign entity, a proportion the Competition Bureau proposed raising to nearly half. Article content Article content 'Allowing more foreign investment in Canadian airlines improves access to capital, drives growth and promotes competition,' the report said, pointing to Australia and New Zealand as places that permit full outsider ownership of in-country carriers. Article content 'As economist Michael Porter famously put it, unless a firm is forced to compete at home, it will usually lose its competitiveness abroad,' Brad Callaghan, an associate deputy commissioner at the Competition Bureau, said during a press briefing. Article content Weak 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. Article content Article content 'Competition in Canada's airline sector has struggled to take off,' it said, noting consumers' dissatisfaction with ticket prices, service quality and range of flight choice. Article content Air Canada and WestJet together account for between half and three-quarters of all domestic passengers at major airports, according to the study. Article content Though competition improved between 2019 and 2023 with the arrival of Flair Airlines and the expansion of Porter Airlines, market concentration remains 'extremely high' and competition from new entrants fragile, the bureau said. Article content 'Many Canadians report that international flights are often cheaper than flights within Canada' — partly due to 'cabotage' rules prohibiting point-to-point trips within Canada by foreign airlines — it noted. The watchdog proposed working with other countries to remove foreign competition restrictions in international agreements.
CTV News
16 hours ago
- Business
- CTV News
Competition Bureau pushes for air travel changes as passengers face high costs and limited choice
Canadians appear on a "YYC" sign at Calgary International Airport in Calgary, Alta., Monday, Oct. 10, 2022. (THE CANADIAN PRESS/Jeff McIntosh) A new report from Canada's Competition Bureau has called for significant reforms aimed at increasing competition in the domestic airline market, reducing airfare prices, and reining in government powers that could hinder a truly competitive environment. The news is promising for airline passengers like Kelsey Wokke who says she just spent $1,000 for a roundtrip flight between Vancouver and Calgary. 'That's absolutely crazy to me,' she said. 'So yes I do think there should be more competition in Canada's airline prices.' 'It's also interesting how if you look at the cost breakdown of your ticket, just how much of it isn't going to your actual flight and directly into airport fees instead. So finding ways to put that money elsewhere would be nice.' Released Thursday, the Competition Bureau's report on the air travel industry advocates for a 'leverage (of) international capital and experience to strengthen domestic competition,' including through raised ownership caps for investors outside Canada. Some of the highlights include recommending major reforms to rebalance the playing field. Among them: raising the cap for foreign ownership of airlines from 25 per cent to 49 per cent, and creating a new class of 'domestic-only Canadian airlines' that could be 100 per cent foreign-owned—a model already in use in Australia. Passengers bear the burden of fees The Competition Bureau also advocated for the Canadian aviation system to make changes to its 'user-pay' model, in which airlines and passengers cover the full costs of building and operating airports and navigation services. These fees account for 30 cents of every dollar passengers pay on traditional full-service airlines, and an even higher share on ultra-low-cost carriers. The breakdown includes: Fuel tax: 1 per cent Air travelers security charge: 3 per cent Nav Canada air navigation charges: 5 per cent Airport landing, terminal, and operational fees: 20 per cent Competition commissioner Matthew Boswell argues this fee structure disproportionately impacts travelers and new market entrants, adding to the challenge of fostering a more competitive and affordable domestic airline market. 'With the right policy changes, governments can create the conditions for new airlines to grow and compete – and give Canadians access to more affordable, reliable options for flights.' Independent aviation analyst Rick Erickson called the report one of the most thorough he's seen, but warned that 'we've heard this before.' 'The structural problem is we don't have enough secondary airports, which stifles new entrants,' he said. 'And the fee structure is nuts—aviation pays more than 100 per cent of its costs. Marine pays 10 per cent, Via Rail gets a subsidy, but aviation gets punished.' Erickson supports the idea of loosening foreign ownership rules. 'We've got to allow more entrants into the market. Full stop.' Nine per cent decrease in airfare for every new competitor added Research from the Competition Bureau shows that when just one new competitor flies on a route between two cities, airfares go down by nine per cent on average. Currently, two airlines—Air Canada and WestJet—handle between 56 and 78 per cent of domestic passenger traffic at Canada's major airports. Over time, they have divided the market geographically, with Air Canada dominating the east and WestJet the west, leading to diminished competition between them, the report notes. The Competition Bureau identifies part of the problem as a restrictive regulatory environment that limits international competitors. Restrictions on non-Canadian airlines operating domestic flights, along with caps on foreign investment, have hindered new and smaller players from entering the market—restrictions the Bureau believes could be eased to foster greater competition. Balanced regulation and consumer protection Gabor Lukacs, President of Air Passenger Rights, welcomed the report's push to reduce government intervention that has historically hindered competition. 'We are pleased that the Competition Bureau adopted our position on opening up domestic air travel to foreign competition and improving transparency around subsidies for remote routes,' Lukacs said. 'Importantly, the report recommends curtailing the minister's ability to override expert decisions on anti-competitive agreements between airlines. This creates a necessary balance between political interests and consumer protections.' Lukacs also highlighted challenges with the current Air Passenger Protection Regulations (APPR), which airlines have frequently contested, driving up costs. 'The APPR has been a failure by design. Airlines complicate the claims process and litigate legitimate passenger complaints, inflating administrative costs,' he explained. 'The solution is to simplify the regulations, following the European gold standard, where passengers can quickly determine compensation eligibility and airlines comply with the law. We want profitable airlines that respect consumer rights, not those that profit by breaking the law.' 090324_flair Flair Airlines Captain Ken Symonds inspects the outside of one of the company's Boeing 737 MAX 8 aircraft, in Richmond, B.C., on Wednesday, April 17, 2024. (Source: The Canadian Press/Darryl Dyck) Opportunity in increased competition: Flair Eric Tanner, VP Commercial at Calgary-based Flair Airlines, welcomed the Competition Bureau's report but stressed that government action is essential. 'We know how difficult it is to compete in Canada's aviation market, dominated by entrenched legacy carriers, with high costs making travel more expensive than elsewhere,' Tanner said. He criticized the current 'user-pay' airport model and lack of oversight, noting, 'Airports here cost much more than in other parts of the world, and fees are unfairly structured to favour certain business models.' Tanner also highlighted that connecting passengers pay far less in fees than local travelers, calling this 'unacceptable,' and pointed out that Flair's customers often pay more in airport fees than those flying with Air Canada or WestJet. 'This report identifies the problems, but now we need government to turn these findings into policies that improve competition and make air travel more affordable for Canadians,' he said. Porter plane A Porter airplane lands in Toronto on Wednesday, March 18, 2020. Porter Airlines and Air Transat are announcing a joint venture as the two carriers look to expand their range of destinations and tap into each other's markets. THE CANADIAN PRESS/Nathan Denette 'Cautious support': Porter Porter Airlines highlighted its efforts to increase competition by expanding its fleet and route network across Canada since 2023. In an statement to CTV News, the airline says it 'sees value in several of the report's suggestions, such as opening international flights at Montreal Metropolitan Airport and exploring new aircraft technology at Billy Bishop Airport.' Porter supports raising foreign ownership limits to 49 per cent for a single shareholder but urges caution on broader foreign ownership and market access changes. The airline warns that allowing foreign carriers to operate domestic routes could disadvantage smaller airlines unless reciprocal access is guaranteed for Canadian airlines abroad—benefits that would mainly favor the largest, most established players. CTV News reached out to both WestJet and Air Canada for comment on the Competition Bureau's report and recommendations, but has not received a response.
