Air Canada-United Deal Could Mean Higher Fares, Competition Bureau Warns

Air Canada and United Airlines want to expand their partnership on 10 routes between Canada and the United States.

But Canada’s competition watchdog is warning that the move could leave travellers paying more for their flights — with fewer competitive options.

In a report submitted to Transport Minister Steven MacKinnon, the Competition Bureau concluded that the proposed arrangement would likely weaken competition on key transborder routes, potentially costing consumers millions of dollars annually in higher airfares.

The findings, released Oct. 28, will form part of the federal government’s public-interest review of the proposal.

What’s At Stake?

Air Canada and United already have an extensive partnership through their Transborder Joint Business Arrangement, which allows the carriers to coordinate certain operations, including pricing, schedules and capacity.

However, 10 routes are currently off-limits to that level of cooperation under a consent agreement reached with the Competition Bureau in 2012.

Those restrictions were introduced after the watchdog determined that allowing the two airlines to coordinate on those routes would substantially harm competition.

Now, as previously reported, the carriers want to expand their cooperation to include those previously restricted markets.

The affected routes connect Toronto, Montreal, Ottawa and Vancouver with U.S. cities including Chicago, Cleveland, Denver, Houston, New York, San Francisco and Washington.

According to the Bureau, Air Canada and United already account for all non-stop passenger traffic on five of the 10 routes, while holding significant combined market shares on the remaining routes.

Allowing the airlines to coordinate their pricing and other operations could effectively eliminate an important source of competition, the Bureau found.

Its analysis suggests the arrangement would likely drive up ticket prices on most of the affected routes, resulting in millions of dollars in additional costs for travellers every year.

Fewer Choices, Higher Prices?

The Bureau also raised concerns about the ability of competing airlines to challenge Air Canada and United.

It found that significant barriers make it difficult for other carriers to enter or expand service in these markets, meaning competition from rival airlines would be unlikely to offset the effects of the proposed partnership.

The result, according to the watchdog, could be monopoly or near-monopoly conditions on several routes.

“Competition between airlines helps keep fares lower and gives travellers more choice and better service . Our review found that allowing Air Canada and United to coordinate on these routes would likely reduce competition on key Canada-U.S. routes and lead to higher prices for travellers,” said Jeanne Pratt, Interim Commissioner of Competition, in a press release.

Ottawa Has The Final Say

The Bureau’s findings do not automatically block the proposed arrangement.

Under the Canada Transportation Act, the Competition Bureau is required to provide its assessment of potential competition concerns when certain airline agreements undergo a federal public-interest review.

The Minister of Transport will consider those findings before deciding whether to authorize the expanded partnership.

The report comes as airline competition remains a significant issue in Canada.

In 2025, the Competition Bureau released a market study examining the state of competition in Canada’s airline industry, along with recommendations aimed at making the market more competitive.