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Canada Watchdog Calls for Easing Foreign Investment Rules in Airline Sector

By  |  June 19, 2025

Canada’s Competition Bureau is calling on the federal government to relax foreign ownership restrictions in the airline industry as part of a strategy to increase competition and lower barriers for new entrants in the domestic market.

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    Following an in-depth, yearlong study, the Bureau concluded that current ownership limits and regulatory constraints are stifling the development of a more competitive airline sector. According to a statement issued by the agency, lifting these restrictions could open the door for new investment, increase innovation, and ultimately benefit Canadian travelers with more choices and potentially lower fares.

    Per the statement, the domestic market is currently dominated by two major players—Air Canada and WestJet—which together control between 50% and 75% of Canada’s passenger air traffic. The Bureau emphasized that this concentration of market power leaves little room for smaller competitors to thrive or for new operators to emerge.

    “Canada’s aviation sector is constrained by foreign ownership limits and restrictions on foreign carriers operating domestic routes in Canada,” the Bureau said in its findings, which also addressed challenges such as infrastructure bottlenecks and regulatory fees.

    Related: Canadian Competition Bureau Releases 2025-2026 Annual Plan: Signals More Aggressive Enforcement Ahead

    Among its top recommendations, the Bureau proposed that the government allow 100% foreign ownership of domestic-only airlines—pointing to Australia as a precedent where such a model has successfully attracted new capital and increased competition. According to a statement, establishing a new category of airline licenses for domestically-focused carriers with full foreign ownership could help sidestep complications with existing international air agreements.

    The study also advised raising the cap on individual foreign ownership in Canadian airlines to 49%, up from the current 25% threshold. Although foreign entities are presently allowed to own up to 49% of voting shares collectively, individual investors face stricter limits. Loosening these restrictions would offer Canadian airlines greater access to foreign capital while maintaining some level of domestic control, per the statement.

    Source: WSJ