Competition Bureau Warns Air Canada-United Deal Would Hurt Fares

Canada’s Competition Bureau said on Wednesday that a proposed arrangement between Air Canada and United Airlines would likely harm competition on 10 routes between Canada and the United States. The finding goes to the Minister of Transport, who still has to decide whether the deal is in the public interest.

The airlines want to expand their Transborder Joint Business Arrangement so they can coordinate more closely, including on pricing, on routes where a 2012 consent agreement still blocks that kind of teamwork. Those limits were added after the Bureau earlier concluded that similar coordination would substantially harm competition, and they remain in force.

Routes in play connect Toronto, Montreal, Ottawa and Vancouver with Chicago, Cleveland, Denver, Houston, New York, San Francisco and Washington. The Bureau’s full list of city pairs includes Toronto-Denver, Toronto-Houston, Toronto-San Francisco, Toronto-Cleveland, Toronto-Washington, Montreal-Chicago, Montreal-Washington, Vancouver-San Francisco, Ottawa-New York and Ottawa-Washington.

Air Canada and United already work together on most Canada-U.S. flying under the joint venture that took effect in 2022, covering schedules, ticket prices, marketing, sales and revenue management. The carve-outs are the main exception. If the minister authorizes the update, the carriers have said they plan to ask the Competition Tribunal to lift the 2012 restrictions so the same coordination can apply on those routes.

On five of the 10 routes, Air Canada and United already account for all non-stop passenger traffic, and they hold large combined shares on the rest. The Bureau’s analysis found the proposal would likely push prices higher on most of the affected routes, with millions of dollars in consumer harm each year. Its simulation work pointed to material fare increases on eight of the 10 routes, with the biggest predicted jumps on Ottawa-Washington, Vancouver-San Francisco, Montreal-Washington, Toronto-Denver and Toronto-Houston.

Barriers to entry and expansion are high, the Bureau concluded, so other airlines are unlikely to keep Air Canada and United in check. The result, it said, would create or reinforce monopoly or near-monopoly conditions on several routes. That sits alongside the Bureau’s 2025 airline market study, which we previously covered when the watchdog pressed for stronger competition against Canada’s big carriers.

Travellers who follow Air Canada news may know the airline for cabin Wi-Fi upgrades, from Starlink on selected aircraft to Bell-sponsored free Wi-Fi, plus loyalty changes that hit Aeroplan cardholders. Fare competition on busy Canada-U.S. city pairs is a different fight, and the Bureau argues keeping independent pricing on these carve-outs still matters for passengers.

Transport Canada opened a public interest review of the proposed update earlier in October and is taking comments from Canadians through November 15. After that process, the minister will weigh the Bureau’s findings with other public interest factors and decide whether to authorize the arrangement, possibly with conditions.

Would you want Ottawa to block closer Air Canada and United pricing on those Canada-U.S. routes, or let the joint venture expand?