Canada's transport administration, Transport Canada, proposes to rewrite the country's aviation laws, but the Competition Bureau thinks it is not enough.

In response to Air Canada's takeover of Canadian Airlines, a parliamentary committee has completed a review of the laws. Ottawa believes these need revision to protect consumers and competition from abuse by Air Canada of its new monopoly.

Based on 42 committee recommendations, Transport Canada proposes an array of changes. The transport ministry and members of parliament broadly agree, although there is tension between them over airline interests versus consumer protection.

The biggest and most open disagreement is between Canada's transport ministry and the Competition Bureau. Konrad von Finckenstein, competition commissioner, calls the extent of Air Canada's new market control "very worrisome". He says the only ways to ensure competition are to allow a higher level of foreign ownership, to allow US airlines to fly within Canada and allow foreign airlines to set up Canadian subsidiaries.

Transport minister David Collenette disagrees. He says Air Canada is too fragile to be exposed to foreign competition on domestic routes, especially after it inherited such a debt and cost burden from Canadian. Neither the special committee nor Collenette suggest raising the foreign ownership limit above its current 25%. Collenette only proposes to lift the voting share limit that one entity can hold in Air Canada, from 10% to 15%.

Transport Canada wants the competition bureau to have powers to define and challenge predatory airline practices. On monopoly routes, the transport agency seeks authority to roll back "unreasonable" fares, limit fare rises, and require Air Canada to offer the same fare discounts on those routes as on others. This is the closest any proposal comes to price re-regulation.

The transport minister has also taken steps to boost transatlantic competition. He is designating Air Transat and Canada 3000 to serve the UK and Germany.

Source: Airline Business