Air Canada–United deal could drive up fares on 10 Canada-US routes, watchdog warns

ASM, Philippine Canadian Inquirer
October 30, 2026

Photo courtesy: The Globe and Mail

Canadians travelling to the United States could face higher airfares under a proposed expansion of Air Canada’s partnership with United Airlines, according to Canada’s federal competition watchdog.

The Competition Bureau warned that allowing the two airlines to coordinate ticket prices and other operations on 10 additional cross-border routes would likely weaken competition and increase travel costs.

In findings released on Wednesday, October 28, the bureau said the arrangement could result in millions of dollars in additional costs for passengers each year.

Air Canada and United already cooperate on numerous flights between Canada and the US. However, restrictions imposed in 2012 prevent them from coordinating prices and certain other business decisions on the 10 routes now under review.

The airlines want those restrictions removed as part of an expanded joint business arrangement.

Why the watchdog is concerned

The Competition Bureau found that Air Canada and United already control a significant share of passenger traffic on the affected routes.

On five of the 10 routes, the two carriers account for all nonstop passenger traffic, leaving travellers with no other airline offering a direct flight.

The watchdog warned that allowing the companies to coordinate their pricing and operations could further limit competition, particularly where alternative airlines are unlikely to enter the market.

Its analysis projected materially higher fares on eight of the 10 routes if the proposal moves forward.

The largest predicted increases were on flights between Ottawa and Washington, Vancouver and San Francisco, Montreal and Washington, Toronto and Denver, and Toronto and Houston.

The bureau did not project material price increases on the Ottawa–New York and Toronto–Cleveland routes, although those routes remain part of its broader competition concerns.

Interim Commissioner of Competition Jeanne Pratt said competition helps keep air travel affordable and gives passengers more options.

“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,” Pratt said.

Which flight routes are affected?

The proposal covers 10 routes connecting four Canadian cities with seven US destinations:

• Toronto–Denver
• Toronto–Houston
• Toronto–San Francisco
• Toronto–Cleveland
• Toronto–Washington, D.C.
• Montreal–Chicago
• Montreal–Washington, D.C.
• Ottawa–New York
• Ottawa–Washington, D.C.
• Vancouver–San Francisco

The restrictions currently require Air Canada and United to make certain decisions independently on these routes, including how they set fares.

Removing those restrictions could allow the carriers to coordinate ticket prices, flight schedules, seat availability and revenue-sharing arrangements.

The Competition Bureau said maintaining independent pricing decisions is particularly important on routes where the two carriers already dominate nonstop service.

Airlines say partnership improves travel options

Air Canada and United have defended their existing partnership, arguing that closer cooperation benefits travellers.

Air Canada said the arrangement has supported the introduction of 20 additional cross-border routes since 2022 and served approximately 4.3 million passengers on itineraries combining flights from both carriers.

The airline said cooperation helps improve connections between communities in Canada and the United States.

United similarly highlighted coordinated flight schedules, additional connection options and greater flexibility for passengers facing travel disruptions.

The airline also said its partnership provides access to more than 1,200 connecting itineraries, with integrated fares that can offer savings compared with purchasing flights separately.

However, the Competition Bureau concluded that those benefits do not eliminate the risks associated with reduced competition on the 10 routes under review.

Government to decide whether deal proceeds

The proposed expansion has not been approved.

Transport Canada is conducting a public-interest assessment to determine whether the arrangement should be authorized.

Transport Minister Steven MacKinnon will consider the Competition Bureau’s findings alongside other factors, including connectivity, economic benefits and the potential impact on passengers.

The minister can approve the proposal, approve it with conditions or reject it.

The airlines would also need to address the existing 2012 competition agreement before implementing the proposed coordination on the affected routes.

Canadians can submit feedback through Transport Canada’s public consultation, which remains open until November 15, 2026.

The review comes amid broader concerns about airline competition in Canada, where limited carrier choices on some routes have raised questions about fares and consumer options.

For now, the existing restrictions remain in place. No fare increase has been authorized or announced as a direct result of the proposal.

The federal government’s decision will determine whether Air Canada and United can expand their cooperation on the routes identified by the competition watchdog.