Competition Bureau warns Air Canada-United partnership could raise fares on eight routes
The Competition Bureau says allowing the airlines to coordinate pricing on eight cross-border routes would weaken competition.
OTTAWA · Canada's Competition Bureau says a proposed expansion of the partnership between Air Canada and United Airlines would likely weaken competition and lead to higher fares on eight cross-border routes. The warning comes as the two airlines seek to renew and expand their joint business agreement, which is under review by Transport Canada. The Bureau's analysis predicts significantly higher prices on routes including Ottawa to Washington, Vancouver to San Francisco, and Toronto to Denver. "Competition between airlines helps keep fares lower and gives travellers more choice and better service," said Jeanne Pratt, Interim Commissioner of Competition.
The Bureau's report, issued October 28, focuses on ten routes where the airlines currently compete independently under a 2012 agreement that prevents them from coordinating prices, sharing revenue or exchanging sensitive business information. The proposed expansion would remove those restrictions. On five of the ten routes, Air Canada and United account for all nonstop passenger traffic. The Bureau warned that closer cooperation could create "monopoly or near-monopoly conditions on several routes" that would cost passengers millions of dollars annually.
Other airlines would face significant obstacles to entering or expanding service on these routes, the Bureau found. Its analysis forecast material fare increases on eight of the ten routes under review. The largest increases were predicted for Ottawa-Washington, Vancouver-San Francisco, Montréal-Washington, Toronto-Denver, and Toronto-Houston. The Bureau did not predict a significant fare increase on Ottawa-New York or Toronto-Cleveland itineraries because only one of the two airlines operates nonstop service on each route, meaning they are not directly competing.
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Air Canada and United say their partnership gives travelers more convenient connections and greater flexibility when flights are disrupted. In a news release, Air Canada said the arrangement supports more than 1,200 connecting itineraries and can offer savings compared with booking each flight segment separately. The airlines announced six new Canada-U.S. routes for summer 2027 last month as part of their broader partnership plans. Novello Desserts reported in October that the renewal of their joint business agreement is under review.
Public comments submitted to Transport Canada's consultation show some travelers share the Competition Bureau's concerns. John Gradek, a faculty lecturer in aviation management at McGill University's School of Continuing Studies, argued that sharing revenue would remove the airlines’ incentive to undercut each other. "Under the joint venture, both carriers would pool revenue on these routes. Neither would gain from undercutting the other, because a passenger won from the partner earns no extra money. Fare competition between the two would effectively end," he wrote.
Another participant, who stayed anonymous, said they were excited about the possibility of more nonstop flights between Toronto and San Francisco but wanted clearer commitments from the airlines on frequency and prices. "I would like AC and United to articulate how much more frequency they will offer and what kind of price competitiveness this will offer for their passengers. I do not want them to increase prices," they wrote. Transport Canada's review will examine the airlines' claims of consumer benefits, along with economic impacts and competition.
Transport Minister Steven MacKinnon will ultimately decide whether to approve the arrangement, approve it with conditions, or refuse it. The review will also take into account input from Canadian travelers, consumer organizations, and the aviation industry. Canadians have until November 15, 2026, to share how the proposal could affect their budgets and flight options through an official consultation page or by email. The proposed expansion has not yet been approved, so the Bureau’s warning does not mean higher fares are already taking effect.
With files from TheTravel