MONTREAL - Canada will lift the limit for foreign investment in Canadian airlines to 49 per cent from 25 per cent to try to boost competition and cut fares, Transport Minister Marc Garneau said on Thursday.

Consumer advocates have long complained that high fares and airport fees make Canada a comparatively expensive country for air travel.

Garneau emphasized that no foreign individual or single group of international investors could own more than 25 per cent of a Canadian airline.

"I expect fares to go down because of competition, and I expect more destination choices for Canadians," Garneau told reporters after a speech on the future of transportation policy.

He said the move would allow for the creation of new, low-cost airlines.

Air Canada, the country's largest carrier, was not immediately available for comment.

Canadian airline WestJet responded to the news by expressing disappointment that the government didn't make a meaningful effort to review aviation cost structure. 

"We firmly believe the largest challenge to ensuring low fares for Canadian consumers is the rising cost of aviation infrastructure. Canada is a much more expensive jurisdiction in which to operate than other jurisdictions. We are disappointed the government has not signaled more clearly a willingness to meaningfully review aviation taxation and cost structure,” WestJet President and CEO Gregg Saretsky said in a statement.

Lifting the investment threshold was one of the main recommendations in a review of transportation laws that Garneau received in February.

Garneau told reporters that the government would look at airport rents and security fees, which critics complain are too high, but made no commitments.

RBC Dominion analyst Walter Spracklin said the change would have very little impact.

"The difficulty start-ups have had in getting off the ground is not for lack of capital but rather, concerns about the risks of a new ultra low-cost carrier business model," he said in a note to clients.

Air Canada shares were down 1.7 per cent on the Toronto stock exchange, while WestJet Airlines Ltd, Canada's other main carrier, dipped before edging up 0.1 per cent.

Delta Air Lines Inc, United Continental Holdings Inc and American Airlines Group Inc did not immediately respond to requests for comment on whether they were considering buying stakes in a Canadian airline in light of the higher investment cap.

Porter Airlines Chief Executive Officer Robert Deluce said the measures would have little impact because his privately held company had solid finances.

"For any (people) who are out there starting a new airline, it maybe gives them more opportunities," he said on the sidelines of the event where Garneau spoke. "It's a good positive step forwards."

Garneau said that although the new rules had not yet taken effect, he would allow two smaller airlines, Canada Jetlines and Enerjet, to seek additional foreign investment immediately.

"I'm doing this because I want more competition for the traveler," he said. 

But will the federal government get veto power when it comes to particular investors? 

“That’s a detail that remains to be worked out in the legislation at the moment that has not been discussed," Garneau told BNN in an interview. "The discussion has been on the amount that a foreign investor is limited in terms of what percentage stake they can have in a new or existing airline."

Garneau says the government will also introduce an air passenger rights regime in the coming months that will establish clear, minimum requirements so Canadians know when they are eligible for compensation in cases of oversold flights or lost luggage.

He says the plan would pull ideas from dozens of other countries that have similar regimes, including the United States and members of the European Union.

It would craft into Canadian law something that had been pushed by the NDP and picked up on by the previous Conservative government, but never turned into reality.

The government has been looking at making major changes to how goods and people are moved by road, rail and air after a sweeping review of the Transportation Act was released earlier this year.

With files from BNN and The Canadian Press