The federal Competition Bureau says that a proposed Air Canada and United Airlines arrangement could harm competition on 10 routes between Canada and the U.S., costing consumers millions of dollars in airfare.
The watchdog report was sent to Transport Minister Steven MacKinnon for review.
The 10 affected routes connect Toronto, Montreal, Ottawa and Vancouver with Chicago, Cleveland, Denver, Houston, New York, San Francisco and Washington.
The routes proposed are restricted by a 2012 consent agreement.
“The restrictions were put in place after the Bureau concluded that similar coordination between the airlines would substantially harm competition. The restrictions remain in force today,” the Competition Bureau said in a news release.
“The Bureau found that the proposed arrangement would eliminate an important source of competition between the airlines on these routes.”
The Canadian and American airlines account for all non-stop traffic on five of the 10 routes, the Bureau said, and have “significant combined market shares on the others.”
Transport Canada says the two airlines have operated under the Transborder Joint Business Arrangement (TBJBA), which allows them to work together on certain routes, since 2022.
“This includes coordination on joint pricing, inventory management, revenue sharing, and the exchange of competitively sensitive information,” Competition Bureau Canada said.
The airlines’ newly proposed arrangement includes an amended and restated version, which the Bureau said would “eliminate competition” on the 10 routes currently restricted.
“If the (agreement) is successfully rescinded, this would permit the Parties to coordinate on the (10) routes in the same manner contemplated by the TBJBA,” the Bureau said.
The proposed expansion would likely mean higher prices and “millions of dollars in consumer harm each year,” it stated, as the Air Canada-United arrangement could create monopoly or near-monopoly conditions on several routes.
“Competition between airlines helps keep fares lower and gives travellers more choice and better service,” said interim president Jeanne Pratt.
“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.”
