02:13 PM EDT, 06/19/2024 (MT Newswires) -- Last month, Canada's Competition Bureau announced that it will launch a market study into passenger air travel service in Canada, focused on the domestic airline industry. The Bureau will analyze the state of competition in Canada, barriers to entry and expansion, and possible impediments to informed customer choice.

National Bank's Cameron Doerksen believes the Bureau will make several recommendations that it thinks will help competition and those recommendations, if enacted, may have negative implications for Canada's airlines (Air Canada ( ACDVF ) notably). The exercise is also intended to be informative to policy makers who have no actual obligation to change government policies. "We do not believe that the Government will make radical changes such as cabotage or forced disposition of airport slots."

However, as the Bureau's study moves forward over the next year, Doerksen suspects there will be increased media attention on the airline sector and that headlines around the final recommendations could be negative for airline investing sentiment, which could be a headwind to share prices. "We suspect that other factors, particularly the broader economy and financial health of travelers will be far more important drivers of airline share prices over the next 12 months, however."

Air Canada ( ACDVF ) is rated Outperform, with a $30 target.

Exchange Income Corp ( EIFZF ) is rated Outperform, with a $60 target.

Air Transat is rated Underperform, with a $2.25 target.

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