Canadian air travellers could face millions of dollars in higher ticket prices if Ottawa approves an expanded partnership between Air Canada and United Airlines, according to a warning from the Competition Bureau.The federal competition watchdog says the proposed expansion of the airlines' cross-border joint venture would reduce competition on 10 routes between Canada and the United States.“The Bureau’s analysis found the proposal would likely result in higher prices on most affected routes, resulting in millions of dollars in consumer harm,” the agency said in a statement.Blacklock's Reporter said the Competition Bureau also warned the proposal would violate terms of an existing Consent Agreement governing cooperation between the two airlines.Air Canada and United have coordinated flight schedules and pricing on certain Canada-U.S. routes since entering into a Transborder Joint Business Agreement in 2022.The airlines now want to expand that arrangement to include additional flights connecting major Canadian cities with American destinations.The proposed routes include Vancouver to San Francisco, and Toronto to Cleveland, Denver, Houston, San Francisco and Washington, D.C.Other affected routes include Ottawa to New York and Washington, along with Montreal to Chicago and Washington.According to the Competition Bureau, the two airlines already control all non-stop passenger traffic on half of the routes under consideration.“Air Canada and United currently account for all non-stop passenger traffic on 5 of the 10 routes and have significant combined market shares on the others,” the bureau said.The watchdog concluded the proposed expansion would “substantially harm competition.”Its findings were outlined in a report submitted to the federal transport minister, who will make the final decision on whether the expanded partnership can proceed.Transport Canada opened public consultations on the proposal October 16.Air Canada has defended the arrangement, arguing its partnership with United provides important connections between Canadian communities and destinations in the United States.In an October 16 statement, the airline said the existing agreement benefits passengers travelling through its domestic network.“For Canadian customers, the partnership plays an important role in supporting connectivity between communities across Canada and the United States,” Air Canada said..The airline estimates the partnership brings approximately two million passengers connecting to or from the United States onto its Canadian domestic network annually.“It brings approximately two million customers connecting to or from the United States onto Air Canada’s domestic network each year, providing benefits to more than 50 communities across Canada,” the company said.The federal government has also sought independent advice on the financial and competitive implications of expanding the arrangement.In a July 17 procurement notice titled Economic And Financial Analysis Of A Transborder Joint Venture Between Two Airlines, Transport Canada sought consultants to examine the proposal.“Canada requires independent economic and financial analysis,” the department stated.Contractors were required to sign non-disclosure agreements and submit their final findings by November 1.Airline joint ventures allow carriers to cooperate on matters such as scheduling, ticket pricing and passenger connections, but regulators must assess whether those arrangements reduce competition or harm consumers.Canada has previously permitted limited cross-border airline partnerships, including an agreement reached between WestJet and Delta Air Lines in 2018.Under the Canada Transportation Act, airlines must notify federal authorities of proposed mergers, acquisitions and joint ventures involving federally regulated air transportation.The Competition Bureau's latest findings put the proposed Air Canada-United expansion under scrutiny as federal officials consider whether the claimed connectivity benefits outweigh the potential for higher fares.The final decision rests with the federal transport minister following the regulatory review and public consultation process.
