Foreign capital limits in Brazilian airline companies could rise to 49 percent from a present cap of 20 percent, according to a draft bill that the Civil Aviation Advisory Council said on July 8 it is sending to the government.

The bill, which will have to be approved by Congress, could raise competition for local airline operators, such as Tam and Gol.

The council, an advisory agency for the presidency on the airline sector, also recommended a shift away from the current concessionary model for operators of domestic routes in favor of companies' applying for authorization.

Brazil's commercial aviation sector, for decades under funded, has been struggling to overcome serious capacity shortfalls at major airports in the face of robust growth in Latin America's largest economy over the past several years.