(Adds comment from Air Canada and WestJet)
By Allison Lampert and Leah Schnurr
MONTREAL/OTTAWA May 16 The Canadian government
unveiled new rules that could help carriers form joint ventures
and attract foreign investment, while bolstering passenger
rights on Tuesday, lifting shares of airline stocks.
Transport Minister Marc Garneau said he would consider
approving joint ventures that allow two or more carriers to
coordinate items like scheduling and pricing on certain routes,
and confirmed plans announced last November to relax
international ownership restrictions on Canadian air carriers,
lifting investment limits to 49 percent from 25 percent.
Air Canada stock rose 5 percent, hitting a 10-year
high of C$17.04 in midday trading, while shares of smaller rival
WestJet Airlines Ltd were up 2 percent.
Canada aims to have the rules in place by 2018.
Air Canada said in a statement the rules would improve its
access to "international investors and global capital markets,"
while the joint venture changes could open new markets "and
accelerate projects that are currently under consideration."
Air Canada has recently said it is on track to complete a
joint venture with Air China Ltd.
The regulatory change would give Garneau a say in the
approval of airline joint ventures which are now only subject to
review under the Competition Act. The change, which would take
the public good into consideration, increases the odds of joint
ventures being approved, RBC analyst Walter Spracklin wrote in a
"This should be a positive for both (airlines) as they seek
to grow and expand their respective networks into new markets,"
Spracklin also said the rules, which give major hubs like
Toronto the option of buying extra services to expedite
passenger screening, could boost demand for travel through
Canada, a positive for airlines.
Both Air Canada and WestJet both said they welcomed new
legislation that would establish clear rights for passengers.
The regulations, expected since 2016, would prevent
overbooking incidents like the recent case of a United Airlines
passenger being dragged off a plane in Chicago.
The rules would apply to all carriers flying in and out of
Canada, and ensure ticketed passengers will not be forced off a
plane because of overbooking.
"Such incidents will not be tolerated in Canada," Garneau
told reporters in Ottawa.
Garneau said the independent Canadian Transportation Agency
would draw up the rules, which would create clear standards of
treatment for cases like lost baggage and lengthy delays on the
tarmac, while ensuring fair compensation for passengers who
voluntarily give up their seats.
(Reporting by Allison Lampert in Montreal and Leah Schnurr in
Ottawa; Editing by Jonathan Oatis and Lisa Shumaker)