A beefed-up partnership proposed by Air Canada and United Airlines would reduce competition and raise airfares, the country’s competition watchdog says.
The expanded joint business arrangement between the two airlines would “substantially harm” competition on 10 cross-border routes connecting major airports, according to a new Competition Bureau report.
In June, Air Canada and United proposed growing their three-decade-old partnership, including on pricing, to routes that connect Toronto, Montreal, Ottawa and Vancouver with seven American cities: New York City, Chicago, Houston, Denver, San Francisco, Cleveland and Washington, D.C.
The proposal builds on the airlines’ 14-year-old joint venture that allows them to co-ordinate fares, schedules and revenue sharing and effectively act as a single business on certain routes, selling one another’s flights to their own customers — common in aviation.
However, interim competition commissioner Jeanne Pratt notes that co-ordination on the 10 routes is barred under a 2012 agreement put in place after the watchdog found that a similar deal would have hurt competition.
She says Air Canada and United currently make up all non-stop traffic on half of those routes and enjoy significant market share on the others. Meanwhile, a high barrier to entry means rivals would be unlikely to constrain the two carriers and could cement “monopoly or near-monopoly conditions” on several corridors, the report found.
“The proposal would likely result in higher prices on most affected routes, resulting in millions of dollars in consumer harm each year,” the bureau said Wednesday.
Federal Transport Minister Steven MacKinnon is set to consider the agency’s findings and decide whether to greenlight the would-be arrangement.
Air Canada and United — respectively the country’s largest airline and the world’s largest airline, as measured by flight volume — hope to rescind the 2012 agreement, arguing that “circumstances have changed,” the bureau’s report states.
American airline executives have cited a raft of challenges this year, ranging from many Canadians’ boycott of U.S. travel to soaring fuel prices and labour disputes.
United Airlines sought to stress the benefits of a co-operation deal.
“Co-ordinated schedules provide more departure options, improved connections and greater flexibility during disruptions,” said spokesperson Megan Boyd.
“The agreement gives customers access to more than 1,200 connecting itineraries, with integrated through-fares that can offer meaningful savings compared with purchasing individual flight segments separately.”
Air Canada did not respond to a request for comment by late Wednesday afternoon.
On one of the routes concerned in the proposal — Toronto to Cleveland — Air Canada already enjoys 100 per cent market share for non-stop flights, the commissioner found.
On four other routes — Montreal-Washington, Toronto-Denver, Toronto-Houston and Ottawa-Washington — Air Canada and United combined have total market share, based on 2025 data. They account for more than three-quarters of all passengers on all but two of the 10 corridors.
“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 co-ordinate on these routes would likely reduce competition on key Canada-U.S. routes and lead to higher prices for travellers,” Pratt said in a release.
This report by The Canadian Press was first published Oct. 28, 2026.
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Christopher Reynolds, The Canadian Press