Canada's Competition Bureau has told the federal transport minister that letting Air Canada and United Airlines deepen their partnership would probably weaken rivalry on 10 routes linking the two countries and push ticket prices up. The agency's report, released October 28, estimates the change could cost travelers millions of dollars annually, and it will feed into Ottawa's public interest review of the plan.

What would the airlines be allowed to do?

The two carriers have partnered for about three decades through their Transborder Joint Business Arrangement. A 2012 consent agreement, however, blocks them from coordinating on 10 specific cross-border routes, a restriction imposed after an earlier review found similar cooperation would seriously damage competition. The airlines proposed in June to extend their coordination, pricing included, into those corridors. The routes in question link Toronto, Montreal, Ottawa and Vancouver with Chicago, Cleveland, Denver, Houston, New York, San Francisco and Washington.

Read also Air Canada-United expansion could raise transborder flight prices

Why does the Bureau see a problem?

On five of the 10 routes, the two airlines already carry every non-stop passenger, according to the Bureau, and together hold large shares on the rest. The agency also found that entering or growing in these markets is difficult, so rival carriers would be unlikely to keep the pair in check. In its view, the arrangement would remove a meaningful source of competition and could entrench monopoly or near-monopoly conditions on several corridors.

Interim Commissioner of Competition Jeanne Pratt said airline rivalry is what keeps fares down and gives travelers more options and better service.

What happens next?

Transport Canada opened a public consultation on the proposal earlier in October. Under the Canada Transportation Act, the Bureau must flag competition concerns to the transport minister when certain airline agreements face a public interest review. Minister Steven MacKinnon will weigh the Bureau's findings, along with feedback from the consultation, before deciding whether to approve the arrangement. No timeline for that decision has been announced.

FAQ

Which routes would be affected?

Flights between Toronto, Montreal, Ottawa or Vancouver and Chicago, Cleveland, Denver, Houston, New York, San Francisco or Washington.

Who makes the final decision?

Transport Minister Steven MacKinnon, after considering the Bureau's report and the public consultation.