Canada’s Competition Bureau is recommending that Ottawa take steps to boost competition in the airline industry, including allowing foreign-owned airlines to operate on domestic routes and phasing out restrictions on foreign ownership. These suggestions are part of a total of 10 recommendations made in a new market study set to be released soon.

The report also advises the government to enhance customer choice by eliminating the Transport Minister's ability to ignore antitrust findings during airline takeovers and partnerships, removing restrictions on smaller airports offering international flights, and implementing policies to foster competition in northern and remote areas.

The study, which does not address ancillary fees, was initiated in response to the collapse of Lynx Air and growing dissatisfaction among passengers with airline services, fees, and availability. While the report does not carry legislative weight, it serves as guidance for the government.

Canada's airline industry is currently dominated by Air Canada and WestJet Airlines, with smaller carriers like Flair Airlines and Porter Airlines also holding significant market shares. Despite the increasing presence of smaller airlines, Air Canada and WestJet still account for a large portion of domestic passengers at major airports.

The Competition Bureau's recommendations were developed after consultations with industry stakeholders, data analysis, and public feedback. Canadians expressed concerns about high airfares and airport fees, as well as a desire for more carrier options.

The study suggests that lifting the ban on foreign airlines flying point-to-point in Canada, along with easing foreign investment restrictions, could lead to expanded routes and improved services. However, there are concerns that foreign competition might threaten domestic players and national interests.

The Competition Bureau has previously advocated for increased foreign participation in the airline sector to enhance competition. In 2018, the government raised the foreign investment limit in domestic airlines to 49 per cent, resulting in the establishment of carriers like Flair Airlines and Lynx Air.

The study proposes raising the cap on a single foreign investor to 49 per cent from 25 per cent and gradually eliminating all foreign investment restrictions on Canadian airlines in the long term. This move could create a new category of carrier that must employ Canadians, facilitating easier expansion and aircraft acquisitions.

While the U.S. limits foreign ownership to 25 per cent, countries like Brazil, Australia, and New Zealand permit foreign ownership of domestic airlines with certain conditions. Hong Kong and Latin American nations prioritize the operations of an airline over its ownership.

The Competition Bureau's role includes investigating market abuses and advising the government on mergers. The agency has expressed concerns about several proposed takeovers in recent years, advocating for the Competition Commissioner to have the authority to block mergers based on antitrust grounds.

Although the study does not address the complex issue of fare classes and additional fees, the Competition Bureau enforces consumer protection laws against deceptive advertising and surprise charges.