Canada’s Competition Commissioner: Proposed Arrangement Between Airlines Would Harm Competition on 10 Routes
Key Facts
In a report dated October 16, 2026, Canada’s Competition Commissioner concluded that the proposed amended arrangement between Air Canada and United Airlines would harm competition on 10 routes between Canada and the United States if implemented. That means the report assesses the potential effects of an arrangement that has not yet been approved, not a new agreement that has taken effect. The bureau said its analysis projects material price increases on 8 of the 10 routes, with annual consumer harm estimated at millions of dollars. The analysis did not project a material price increase on the Ottawa–New York and Toronto–Cleveland routes, as only one of the two airlines operates direct flights on each. The case now moves to a government review that could end with approval of the arrangement, conditions being imposed or rejection.
The proposed arrangement goes beyond limited operational cooperation, allowing the airlines to share revenue on routes between their hubs and coordinate pricing, revenue management, route planning and schedules. Current restrictions require each airline to make these decisions independently on the covered routes. Regulatory concerns are that expanding coordination on decisions that determine prices, capacity and flights could weaken competition faced by passengers. The proposed arrangement has an initial term of 5 years, with automatic renewal for successive periods of the same length. The proposal was formally referred to the Minister of Transport and the Competition Commissioner on June 18, 2026, before the commissioner issued his findings in October.
The case is based on restrictions in place since a 2012 consent agreement, which barred the airlines from coordinating on 14 air routes, including on prices, seats available at each price, revenue or cost sharing, and exchanges of commercially sensitive information. Since the consent agreement was registered with the Competition Tribunal, 3 routes have been removed after Air Canada exited them for reasons unrelated to cooperation between the airlines. Restrictions on coordination on the Calgary–Houston route have also been suspended under a mechanism linked to market conditions. The commissioner’s findings say the amended arrangement, as proposed, would harm competition on the 10 routes still under review. The report also says other competitors have limited ability to constrain the airlines’ market power.
The bureau said entry by other airlines on these routes, or their expansion, would be unlikely and would not occur in time or at sufficient scale to offset the airlines’ market power. It cited financial, operational and regulatory barriers, along with limited airport capacity, as factors hindering competitors’ entry or expansion. The bureau’s projections of material price increases, however, do not cover all 10 routes; its analysis excluded Ottawa–New York and Toronto–Cleveland from that effect. The report said these exceptions reflect that only one of the two airlines operates direct flights on each route. On Ottawa–New York, United’s share rose to 48% in the first half of 2026, compared with 42% in 2025 data.
After the competition report, Transport Canada is reviewing the proposal’s public interest and is expected to issue a report on the concerns before giving the airlines an opportunity to respond and propose measures or amendments. The legal process gives the minister 150 days to issue a report after receiving the notice and required information. After the review, the minister may approve the proposal, approve it with conditions or reject it, balancing the public interest against the arrangement’s effect on competition. Transport Minister Stephen MacKinnon said the assessment would include consultations with Canadians, aviation industry representatives, consumer groups and stakeholders. The ministry invited the public to submit their views by November 15, while United Airlines shares closed at $104.71 on October 27.