Carriers welcome increased limit

Mr. Lapierre, who is pushing for further liberalization of Canada’s bilateral air services agreement with the U. S., said relaxed restrictions on foreign ownership will, in some cases, simply recognize what is already taking place in the industry.

“The limit we’re imposing right now is a lawyer’s dream because it requires all sorts of imagination to respect (the 25% rule),” Mr. Lapierre said.

Several Canadian air carriers have sought to sidestep current foreign ownership rules by adopting special variable voting share structures, which have been approved by regulators. Variable voting shares are a special class of shares that are issued to foreigners, but limit the voting power of the entire share class to 25%.

The variable voting structure was first adopted by Air Canada’s parent, ACE Aviation Holdings Inc., as a way to emerge from its restructuring with a large U. S. investor base. According to the Transport Minister’s office, nearly 80% of ACE’s outstanding shares are held by non-Canadians. WestJet Airlines Ltd. and tour operator Transat A. T. Inc. have adopted the same variable voting share model.

James Moore, the Conservative Party transportation critic, said he has been calling for the raising of foreign ownership limits for years. “ It would enlarge the pool of investment capital available to air carriers, while maintaining Canadian ownership,” Mr. Moore said.

Both Air Canada and WestJet said yesterday they support the minister’s position on foreign ownership. “ An increase to the limit to 49% would contribute to the overall health of the industry, allowing us to access important equity and capital markets internationally,” said Laura Cooke, a spokeswoman for Air Canada.