A new report from the Competition Bureau warns that a proposed expansion of the partnership between Air Canada and United Airlines could lead to significantly higher airfares for travelers. The watchdog's findings, released October 28, suggest that allowing the two carriers to coordinate on 10 specific transborder routes could result in millions of dollars in annual consumer harm.

What is the proposed expansion?

While the two airlines have operated a joint business arrangement since 2022, they are seeking to expand their cooperation to include 10 routes currently restricted by a 2012 consent agreement. This agreement was originally established to prevent the airlines from coordinating on pricing, schedules, and capacity in markets where they hold dominant positions. Under the new proposal, the carriers would be able to work together on:

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  • Flight pricing and revenue sharing
  • Scheduling and capacity management
  • Marketing strategies

How will this affect airfares?

On five of the 10 targeted routes, Air Canada and United currently provide all non-stop passenger service. The Bureau's analysis suggests that removing the existing restrictions would likely create monopoly or near-monopoly conditions. The report predicts material price increases on eight of the ten routes, with the most significant jumps expected on flights such as Vancouver–San Francisco, Ottawa–Washington, and Toronto–Houston.

Because high barriers to entry make it difficult for other airlines to enter these markets, the Bureau believes competition will not be able to keep these costs in check. As interim commissioner Jeanne Pratt noted, "Competition between airlines helps keep fares lower and gives travellers more choice and better service."

What happens next?

The final decision rests with the Minister of Transport, who is conducting a public interest review of the proposal. The Minister has the authority to approve or veto the arrangement based on the Bureau's findings. Canadians can provide feedback on the proposal through Transport Canada until November 15.

FAQ

Which cities are most affected by this deal?

The routes connect major hubs in Toronto, Montreal, Ottawa, and Vancouver with several U.S. cities, including Chicago, Denver, San Francisco, and Washington.

Why were these routes restricted in the first place?

A 2012 agreement was put in place because regulators determined that coordination between these two specific airlines would substantially harm market competition.