Competition Bureau Warns Air Canada–United Deal Would Raise Fares on 10 Canada–U.S. Routes

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Choosing between two airlines does not necessarily mean choosing between two competitors. That is the concern behind a new warning from Canada’s Competition Bureau about Air Canada and United Airlines.

In findings made public on October 28, 2026, the watchdog concluded that expanding the carriers’ cross-border partnership could weaken competition on 10 Canada–U.S. routes and cost passengers millions of dollars annually.

There is an important distinction: the Bureau predicts materially higher fares on eight of the 10 routes, not all 10. The airlines maintain that closer cooperation can improve connections and travel options, but federal officials must decide whether those benefits outweigh the potential harm. For Canadians booking business trips, family visits or holidays, the outcome could affect both prices and choice.

Toronto–Denver: Two Airlines Control the Entire Nonstop Market

The Toronto–Denver route illustrates why the Competition Bureau is concerned about allowing Air Canada and United to coordinate more closely. During the first six months of 2026, Air Canada carried approximately 58% of nonstop passengers, while United accounted for the remaining 42%. No other airline registered a share of the nonstop market during that period. Although the carriers already cooperate on many cross-border services, existing restrictions require them to make certain pricing decisions independently on this route.

The Bureau identified Toronto–Denver among the five routes expected to experience the largest fare increases if those restrictions disappear. For a passenger attending a conference, visiting family or making a connection through Denver, the practical concern is straightforward. Two airlines may still appear in flight searches, but coordinated pricing could reduce the competitive pressure that helps keep tickets affordable. The Bureau’s prediction is based on economic modelling, not an increase that has already occurred.

Toronto–Houston: An Even Split Raises Competition Concerns

Competition between Air Canada and United is particularly visible on flights connecting Toronto with Houston. In the first half of 2026, the airlines each carried approximately 50% of nonstop passengers. That unusually even division means neither carrier faced a third nonstop competitor during the period examined. Under the current rules, the airlines remain restricted from jointly setting prices and coordinating certain other commercial decisions on this route.

Houston is also one of United’s major connecting hubs, making the route relevant to travellers whose journeys continue beyond Texas. A passenger comparing two nonstop departures might reasonably expect the airlines to compete for the booking. The Bureau warns that expanded coordination could weaken that incentive, and its simulation places Toronto–Houston among the routes facing the largest potential fare increases. The proposed arrangement does not mean every ticket would immediately become more expensive, but it could change the competitive conditions that influence fares over time.

Toronto–San Francisco: Porter Provides an Alternative, but the Partners Dominate

On Toronto–San Francisco, there is a third airline in the picture. During the first half of 2026, Air Canada handled approximately 60% of nonstop passenger traffic, United carried 21%, and Porter Airlines accounted for 19%. Porter’s presence gives travellers an independent option, unlike the routes where Air Canada and United account for the entire nonstop market. Nevertheless, the two larger airlines collectively carried 81% of passengers, leaving relatively little market share outside their partnership.

That concentration matters when passengers compare more than the advertised ticket price. Someone travelling to a meeting may need a particular departure time, while a family planning a California vacation might prioritize the overall cost of several seats. The Bureau found that prices generally tended to be lower when travellers had more competing departures available within similar time windows. Its modelling suggests Toronto–San Francisco would experience a material fare increase if the proposed coordination expands, even though Porter would remain a competitor.

Montréal–Chicago: American Airlines Faces Two Dominant Rivals

Montréal–Chicago offers another example of a market where an independent competitor is present but substantially smaller than the two airlines seeking closer cooperation. During the first half of 2026, Air Canada carried approximately 50% of nonstop passengers, United accounted for 33%, and American Airlines served the remaining 17%. Together, Air Canada and United controlled roughly five-sixths of the market. That combined position is significant even with three airline names appearing in flight searches.

Chicago’s airport infrastructure adds another dimension to the concern. The Bureau identified access to facilities and preferred operating times as important obstacles to airline expansion, particularly at busy American airports such as Chicago O’Hare. Adding a new flight is not simply a matter of finding an available aircraft; airlines also need suitable airport access and enough demand to support the service. For Montréal passengers, the Bureau’s concern is that American’s existing presence may not fully replace the pricing pressure currently created by independent competition between Air Canada and United.

Montréal–Washington: A Route With No Independent Nonstop Rival

For Montréal–Washington, the competition picture is especially stark. The Bureau’s 2025 figures show Air Canada carrying 76% of nonstop passengers and United handling the remaining 24%. No independent competitor appeared in that year’s nonstop traffic breakdown. Importantly, the route definition includes the Washington-area airports of Reagan National, Dulles and Baltimore/Washington. Even when those airports are considered together, the two partners accounted for all measured nonstop passenger traffic.

This creates a particular concern for travellers who need direct service between Québec and the U.S. capital region. A person heading to a government meeting, professional conference or family gathering may have limited flexibility to accept a lengthy connection. The Bureau identified Montréal–Washington among the five routes facing the largest predicted fare increases under the proposed arrangement. Its analysis suggests that allowing the two existing operators to coordinate prices would remove a meaningful source of competition. The concern is about what could happen if the proposal is implemented, rather than evidence of fare increases already occurring.

Toronto–Cleveland: The Important Exception to the Fare Warning

Toronto–Cleveland stands out for a different reason. Air Canada accounted for 100% of the route’s nonstop passenger traffic in both 2025 and the first half of 2026, according to the Bureau’s figures. United did not operate a competing nonstop service, although both airlines could sell tickets for travel between the cities. On paper, that makes the market exceptionally concentrated. Yet the Bureau’s simulation did not predict a material fare increase on this particular route.

The explanation lies in the difference between selling a ticket and operating a competing flight. Because only Air Canada currently operates the nonstop service, expanded cooperation would not eliminate an existing head-to-head operating rivalry with United. That does not mean Toronto–Cleveland is a highly competitive market or that fares could never rise for other reasons. It means the Bureau did not identify a substantial additional pricing effect from this specific proposal. The distinction matters because its broader warning concerns 10 routes, while its measurable fare-increase forecast applies to eight.

Vancouver–San Francisco: Competition Has Already Narrowed

Vancouver–San Francisco is particularly significant because the competitive landscape has changed recently. In 2025, Air Canada carried approximately 35% of nonstop passengers, United had 41%, Flair accounted for 20%, and WestJet served about 5%, with figures subject to rounding. During the first half of 2026, the Bureau recorded a different picture: Air Canada held 38%, United 47%, and Flair 15%. WestJet was no longer operating nonstop service on the route during that period.

That change left Air Canada and United with a combined market share of approximately 85%. The Bureau identified Vancouver–San Francisco among the five routes with the largest predicted fare increases if the carriers are allowed to coordinate more closely. The route also involves airports where obtaining desirable operating times can be challenging for competing airlines. For passengers travelling between British Columbia and Northern California, the concern extends beyond a single expensive ticket. Reduced rivalry could make affordable nonstop options harder to find consistently.

Ottawa–New York: Porter Changes the Competitive Equation

Ottawa–New York presents a notable contrast to several other routes under review. During the first half of 2026, Porter Airlines carried approximately 52% of nonstop passengers, while United accounted for 48%. Air Canada did not operate nonstop flights in this market. Although both Air Canada and United sell tickets involving the route, only United operates the nonstop service among the two partners. Porter’s substantial presence gives travellers a competitor outside their arrangement.

That difference helps explain why the Bureau did not predict a material fare increase from expanded coordination on Ottawa–New York. There is no existing nonstop operating rivalry between Air Canada and United to eliminate, while Porter remains an independent competitor. The route covers travel to the New York metropolitan area, including Newark, LaGuardia and John F. Kennedy airports. Those airports face scheduling and capacity constraints, making future competition an important consideration. Nevertheless, the Bureau’s findings show why each route needs individual scrutiny: the same airline partnership can have different effects depending on who actually operates the flights.

Ottawa–Washington: One of the Strongest Warnings About Higher Fares

Ottawa–Washington is among the most concerning routes in the Bureau’s assessment. In the first half of 2026, United carried approximately 65% of nonstop passengers, while Air Canada accounted for 35%. Together, they represented the entire nonstop market measured by the Bureau. The route connects the two national capital regions, making it relevant to trips involving government business, professional meetings, conferences and personal travel. For passengers with fixed appointments, an additional connection may be an inconvenient alternative.

The Bureau’s economic modelling identified Ottawa–Washington as one of the five routes facing the largest potential fare increases. Under the existing restrictions, Air Canada and United must continue making certain commercial decisions independently. Expanding their partnership could remove that separation, allowing more extensive coordination over prices and capacity. The Bureau found that connecting flights generally do not provide a strong enough competitive substitute for nonstop service on the routes examined. That makes the loss of independent pricing especially important where no other airline operates a competing direct flight.

Toronto–Washington: The Decision Could Shape Future Airline Competition

Toronto–Washington has a more diverse competitive market than several other routes in the review. During the first half of 2026, Air Canada carried approximately 47% of nonstop passengers, United 19%, Porter 16%, and American Airlines 18%. The Air Canada–United partnership therefore represented about 66% of traffic, while two independent competitors served the remaining third. Despite those alternatives, the Bureau’s modelling still predicts a material fare increase if expanded coordination receives approval.

The airlines present a different argument about the broader benefits of their partnership. Air Canada says the existing arrangement has supported 20 new cross-border routes since 2022 and gives customers access to more than 1,200 connecting itineraries. Those claimed network benefits form part of the wider policy debate, although they do not establish that fares on the 10 affected routes would remain competitive. Transport Canada is accepting public feedback until November 15, 2026. The transport minister must weigh competition concerns against other public-interest considerations before deciding whether to authorize the proposal, potentially with conditions. The existing Competition Tribunal restrictions would also need to be addressed before full coordination could proceed.

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