EDITORIAL: Open Canada's skies to foreign competition

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The ongoing labour dispute between Air Canada and its flight attendants is a textbook example of why the federal government should follow the advice of its own experts and increase foreign-competition in Canada’s airline industry.

As things stand, the travel plans of hundreds of thousands of Canadians and other international travellers flying for business and personal reasons have been throw into chaos and our economy is taking another financial hit in tough economic times.

Meanwhile, the Canadian Union of Public Employees, representing flight attendants, is defying a government back-to-work order with the real victims being the innocent travelling public.

Beyond this strike, polls have shown widespread public dissatisfaction with the state of Canada’s airline industry.

Complaints include high fares — with international flights often cheaper than flights within Canada — limited airline options, spotty service and user fees that make up 30% of every dollar passengers pay for full-service airlines.

While there’s no panacea to instantly fix all of these problems, the Competition of Bureau of Canada, a federal agency, said in a report released in June that part of the solution is to open Canada’s airline industry to more foreign competition.

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It recommended that single-investor foreign ownership in Canadian airlines should be increased to 49% from 25% and that a new class of airlines operating only in Canada should be created where up to 100% foreign ownership would be allowed.

“Canada’s aviation sector is constrained by foreign ownership limits and restrictions on foreign carriers operating domestic routes in Canada (known as cabotage),” the completion bureau said in its report, Cleared for take-off: Elevating airline competition — A market study of Canada’s airline industry.

“These restrictions make it harder for airlines to access capital from investors outside Canada. Ultimately this affects the flying public through fewer choices and higher prices. Other countries have adopted looser regulations.

“These restrictions affect new and smaller airlines above all. They already struggle more than established airlines to secure funding. Recent market entrants have said that foreign investment is critical for them to launch and continue flying. Reconsidering these restrictions would unlock new capital sources for Canadian airlines. This in turn will stimulate greater competition and innovation in the domestic market.”

Prime Minister Mark Carney should act on this advice.