statement

BTC Applauds Forward-Thinking Canadian Competition Bureau Proposal

Greater airline competition is key to solving intractable problems

Radnor, PA, January 22, 2008–The Business Travel Coalition (BTC) today applauded Canadian Competition Bureau’s recommendations to open the domestic Canadian commercial air transportation services market to much needed competition from foreign airlines.

  BTC Chairman Kevin Mitchell said, “The Canadian competition authority has identified the key problem facing Canadian consumers of air travel services – the lack of meaningful airline competition -- and recommended constructive steps to ameliorate this unfortunate, longstanding situation.   Consumers in Canada deserve more airline choice and lower fares, and business travelers deserve more efficient travel procurement options than are currently offered in this important but increasingly broken market. With more airline competition, airlines operating in Canada will become more responsive to consumer preferences.”    

The Competition Bureau recognized that “the public interest in airline competition goes beyond the interests of existing domestic market participants to include the economy generally and important industries, such as tourism.” In light of this, the Commissioner recommended increasing foreign ownership limits in Canadian carriers from 25% to 49.9%, allowing 100% foreign ownership of carriers that carry passengers and goods only within Canada – thereby creating a new class of “Canada-only” carriers, and allowing foreign carriers to engage in “cabotage” – a practice which would involve foreign carriers picking up passengers at Canadian gateways and transporting them to other Canadian cities.   These proposals advanced by the Canadian government would inject foreign capital into the Canadian market, increase the number of routes served to and from Canada, and further promote competition.  

A significant public policy issue that the Competition Bureau identified is whether these reforms and opening up the Canadian market to foreign carriers should be implemented unilaterally or only on a reciprocal basis. For its part, the Bureau concludes that “based on competition grounds a strong case exists supporting the implementation of such measures unilaterally.” Whether liberalization comes unilaterally or reciprocally, the BTC urges other nations to recognize the value to consumers in opening domestic markets to more competition from foreign carriers. Recent reports of stepped up merger and joint venture activity in the US and Europe make this an imperative.    

“In the months ahead, discussions will be initiated within the industry about shaping a brighter future for the Canadian air transportation services market,” said Mr. Mitchell. “The Competition Bureau’s views offer a helpful and optimistic focal point for these discussions.”    

The full text of the Competition Bureau’s proposal can be found at http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/02555e.html