Federal government urged to allow foreign airlines into Canada

The Canadian Airports Council and at least two Western Canadian tourism organizations are urging the federal government to seriously consider allowing foreign airlines — or investors — to set up wholly owned airline operations in Canada, following a model launched in Australia in 1999, reports the National Post.

Such carriers, under the so-called right of establishment, would be restricted to domestic flying and would be operated by Canadian employees.

The recommendations from the CAC, as well as the British Columbia Council of Tourism Associations and Tourism B.C., came as a result of their input into a federal government review of international air policy.

The government review is expected to release its own recommendations in the near future.

The CAC, which represents 95 Canadian airports facilitating the movement of virtually all passenger and cargo traffic in the country, supports the concept because it keeps jobs in Canada while allowing for financing outside of Canada and increased competition.

The major policy change was first recommended by Konrad von Finckenstein, the Competition Commissioner, but has not been supported by Mr. Collenette, who has said he wants to see competition to Air Canada grow from within the country.

It was also downplayed last month in recommendations for changes to the Canada Transportation Act, which proposed instead that the federal government move to negotiate free trade in air services with the United States and Mexico, and look at rights of establishment only as a backup plan.

The federal government is expected to undertake a review of the domestic airline industry after a transition period of 18-months to 24-months from Air Canada’s takeover of the Canadian Airlines, which would fall at the end of this year.