Fred Lazar
Potential Market Impacts of Liberalization Options on the Commercial Canadian 
Aviation Industry

The report considers the potential effects of further liberalization of domestic aviation, through raising foreign ownership limits; granting foreign airlines modified sixth freedom rights, consecutive cabotage rights and/or stand-alone cabotage rights; or allowing foreign ownership of domestic-only carriers. The paper reviews market entry since deregulation, including developments in the cargo market. It examines experience in the U.S. and Australia, using this to predict likely responses to the various liberalization options. The study concludes that there would be limited entry by foreign competitors, but even that would weaken the financial performance of smaller Canadian carriers. The paper argues against unilateral Canadian liberalization and suggests that relaxing foreign ownership limits might do more to ensure the survival of domestic competition than any other change.