Photographer: Brent Lewin/Bloomberg

Air Canada Hopes to Resuscitate Cross-Border Venture With United

  • Coordination could become easier under proposed legislation
  • Bilateral market is ‘the largest in the world,’ executive says

Air Canada is eager to revive a revenue-sharing arrangement with United Airlines on cross-border routes, now that a bill in the Canadian Parliament has been introduced that could make such joint ventures easier to pass regulatory muster.

“We’re definitely interested in pursuing a JV with United,” Yves Dufresne, Air Canada’s vice president of alliances and regulatory affairs, said Tuesday. “The Canada-U.S. bilateral air transport market is still the largest in the world. We made an attempt several years ago but there were so many roadblocks.”

The carriers, both members of the Star Alliance group of airlines, in 2012 abandoned efforts to coordinate cross-border service after Canada’s Competition Bureau said the venture would create a monopoly on 10 routes, hurt competition and spark “significantly higher prices.”

The door opened slightly last month when Canadian Transport Minister Marc Garneau proposed a law in which plans to cooperate on scheduling, pricing, marketing and the like would be reviewed with “public interest considerations” as well as under competition laws. Joint ventures between air carriers currently are subject to review solely under the country’s Competition Act.

The new law would take into account “more than the just the microeconomic implications of two carriers working together,” Dufresne said at a press briefing in Montreal. Such alliances would be studied “from a broad public-interest, international-trade” perspective, he said. Prime Minister Justin Trudeau’s government controls a majority of seats in the House of Commons, meaning the bill is likely to be approved.

United Continental Holdings Inc. didn’t immediately respond to a request for comment.

Air Canada controlled an estimated 45 percent of the cross-border market last year, while United controlled 12 percent, according to a regulatory filing posted on Air Canada’s website. Toronto Pearson Airport, Air Canada’s biggest hub, is the world’s largest source of flights into the U.S.

It’s too early to know when a venture with United might take shape, Dufresne said.

“When the timing is right we will pursue it,” he said. “We’re not talking his year.”

— With assistance by Mary Schlangenstein

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE