AP News

Canada competition watchdog reaches airline deal


TORONTO (AP) — Canada's competition watchdog said Wednesday it has reached an agreement with Air Canada and U.S. partner United Continental that will allow them to cooperate on transborder routes while protecting consumers.

Under the agreement, Air Canada and United Continental are prohibited from coordinating their prices and sharing other commercially sensitive information on 14 high-demand transborder routes.

Interim Competition commissioner John Pecman said the agreement "will ensure that passengers do not face higher prices and less choice on high-demand routes between Canada and the U.S."

The airlines announced the joint venture in October 2010 but suspended their plans in June 2011 after the Competition bureau intervened and raised concerns. The bureau originally identified 19 transborder routes, including 10 monopoly routs, where competition would be substantially reduced. But after reviewing additional information it determined that competition won't likely be substantially harmed on five of those routes.

Under the agreement, Air Canada and United Continental Holdings Inc. — formed by the merger of the United and Continental airlines — will be prevented from coordinating the number of seats available at each price on the affected routes.

They will also be prevented from sharing commercially sensitive information or pooling revenue or costs on the routes.

Canadian airlines are unable to formally merge with non-Canadian airlines because of foreign ownership restrictions.

Air Canada said in a statement that it's pleased the settlement preserves its long-time relationship with United Airlines — two of North America's largest carriers.

Air Canada is Canada's largest domestic and international airline serving more than 175 destinations on five continents.


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