OTTAWA — The Competition Bureau says a proposed expansion of Air Canada and United Airlines’ joint venture would likely reduce competition and drive up fares on 10 Canada-U.S. routes.
In a report delivered to the Minister of Transport, the Bureau concluded that the proposed arrangement would likely result in millions of dollars in consumer harm each year. The findings will inform the federal government’s public interest review of the agreement.
Under the proposal, the two airlines would be allowed to expand their coordination, including on pricing, on 10 cross-border routes currently excluded from their Transborder Joint Business Arrangement under a 2012 consent agreement. The restrictions remain in force today after the Bureau determined that similar coordination would substantially harm competition.
Air Canada and United currently account for all nonstop passenger traffic on five of the 10 affected routes and have significant combined market shares on the others, the Bureau said. It also found that high barriers to entry and expansion would make it unlikely that other airlines could provide sufficient competition, potentially creating or reinforcing monopoly or near-monopoly conditions on several routes.
The affected routes connect Montréal, Ottawa, Toronto and Vancouver with Chicago, Cleveland, Denver, Houston, New York, San Francisco and Washington.
“Competition between airlines helps keep fares lower and gives travellers more choice and better service. 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,” said Jeanne Pratt, Interim Commissioner of Competition.
Transport Canada launched a public consultation on the proposed expansion earlier this month, inviting Canadians to provide feedback as part of its public interest assessment. Under the Canada Transportation Act, the Minister of Transport will consider the Bureau’s findings before deciding whether to authorize the arrangement.
