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A Westjet plane on its final approach to Toronto Pearson Airport on Dec 15 2015.

Fred Lum/The Globe and Mail

The federal government should increase the limits on foreign ownership of Canada's passenger airlines, a review of the Canada Transportation Act says.

The limit should be raised to 49 per cent from its current level of 25 per cent, says the review, which was set up by the Conservative government that was defeated in the 2015 federal election.

Foreign interests should be permitted to own 100 per cent of cargo airlines, the review said.

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"Our goal is to see Canada join most other large aviation markets in allowing significant (but not full) foreign ownership of passenger air carriers, and become a leader in allowing full ownership for freight and specialty air service," said the report, which was issued Thursday.

The changes should help narrow the gap between Canada and other markets when it comes to the relatively low level of competition and relatively high airline fares, the report said.

"They would also bring Canada up to the OECD average for "trade friendliness" in air transport.

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