Air Canada and United planes. Photo: Shutterstock The Canadian Competition Authority is warning of harm to competition and price increases following a proposed arrangement between United Airlines and Air Canada. In a statement released yesterday, October 28, the authority said its review found that the expanded cooperation is likely to harm competition on ten routes between Canada and the United States.
The arrangement will allow the companies to expand coordination, including on pricing, on routes where such coordination is currently restricted under a 2012 agreement. The restrictions are still in effect.
According to the authority, the two companies together hold all direct passenger traffic on five of the ten routes and significant market shares on others. It estimates the move will raise prices on most routes and cost consumers millions of dollars each year.
The Authority notes that the barriers to entry and expansion are high, making it unlikely that other companies will be able to curb the power of United and Air Canada. As a result, the arrangement could create or strengthen a monopoly or near-monopoly on some routes.
The authority's findings were forwarded to the Canadian Minister of Transport, who will examine them as part of the public interest review and decide whether to approve the arrangement.