Air Canada and United Tighten Up Partnership with Transborder Joint Venture

Air Canada, United

It’s always been a weird dance between Air Canada and United. For two decades,the airlines have had a joint venture, but it has only covered Transatlantic travel. Now, a new joint venture that will cover Transborder travel is finally happening. It’s remarkable that it took this long.

It was the early 2000s when United entered into its first Transatlantic joint venture. Most people know it involved Lufthansa (eventually including Lufthansa Group subsidiaries Austrian, Brussels, Eurowings, and SWISS), but many overlook that it also includes Air Canada. That means for the last 20 years, these airlines have been able to coordinate schedules and jointly set fares for all travelers heading over the Atlantic.

With United and Lufthansa Group, this was easy, because the overlap between the two airlines was all included in the joint venture. But between United and Air Canada, that wasn’t the case. Think about it this way. If someone bought a ticket on United 5791 from Denver to Toronto and then connected to Air Canada 872 to Paris, that fell under the joint venture. But if someone bought a ticket on United 5791 from Denver to Toronto and then connected to Air Canada 420 on to Montreal, then it was not part of the deal.

This isn’t just a one-off. There are a massive number of flights between the two airlines over the border. Here’s a look at this summer’s route map:

Air Canada & United Canada – Continental US Routes July 2022

Map via Cirium, Red operated by Air Canada or Express, Blue operated by United or Express

United only flies from its hubs into larger Canadian cities, but Air Canada flies from its hubs to United hubs and much, much deeper into secondary markets. Don’t let United’s relatively sparse route map fool you, however. United is the second largest airline in the market this July, even ahead of WestJet.

Air Canada this July has just over 45 percent of seats in the market. United follows with nearly 12 percent. The combined 57 percent is a lot, but apparently the two airlines are already allowed to coordinate thanks to the antitrust immunity they have from their Transatlantic joint venture, so this should be an easy implementation now that they’ve apparently agreed on commercial terms.

On the one hand, this will have some good benefits for travelers. For example, it should fix some scheduling oddities. Looking at Dulles to Toronto this August, Air Canada has a flight at 6:30am, 11:20am, and 6:10pm. Instead of filling in the empty spots, however, United has scheduled flights at 12:30pm and 5:06pm, not far off the existing Air Canada flights. Now the two will coordinate and can likely provide greater coverage during the day.

It will also apparently allow them to expand their codeshare. The current setup has some strange outcomes right now. From Newark to Toronto, as an example, Air Canada has 6 flights of its own and codeshares on 1 United flight. Meanwhile, United has 4 flights of its own and codeshares on 3 of Air Canada’s. Travelers don’t get the full picture of options when looking at just one airline, even though they might think otherwise since there is some codesharing.

Even on flights where there is overlap, there can be enormous fare differences. When I wrote this on Saturday, I looked up the 6:30am flight from Dulles to Toronto on August 10. It’s an Air Canada flight, and you can get a ticket for as little as $237.13 if you buy through Air Canada.

But if you go to United? It’s $904.70.

This semi-relationship is confusing and makes it tougher for some travelers to understand all their options. It also means that travelers can buy tickets from their preferred airline and be treated the same either way. Anyone who bought a ticket through Air Canada before the pandemic only to have Air Canada flout US law and not allow refunds for many, many months would probably be thrilled to buy that ticket through United instead.

The downside, of course, is that competition is limited. But how much are they actually competing today? When you’re already in a joint venture in one geographic area and not in another, it gets really tough to keep separate. (And yes, I feel the similarly about American/JetBlue even though it’s a different situation.)

It seems to me that there is likely more benefit to having them work together more closely and completely compared to the sort-of-half-partnership they have today in the Transborder market.

24 comments on “Air Canada and United Tighten Up Partnership with Transborder Joint Venture

  1. What is the status of the WestJet-Delta joint venture? I can’t tell if it was ever actually approved. Delta has a 2019 press release saying it was approved by the Canadian authorities, but no corresponding indication that it was approved by the Americans.

    If the Americans won’t approve a Delta-WestJet joint venture, I can’t see why they’d approve a joint venture between the #1 and #2 transborder players.

    1. It was approved by US regulators but Westjet was the owner of 8 (?) LGA slots that were given as a result of Delta having to divest them about a decade ago, i believe as part of the DL/NW merger but I could be wrong on that point. Understandably, The US government was going to require Delta/WS to divest those 8 slots to someone else now but Delta/WS decided to not have a JV rather than divest those LGA slots.

      https://www.reuters.com/article/us-delta-air-westjet/delta-westjet-scrap-planned-joint-venture-after-u-s-demands-idUSKBN28105J

    2. I’m a bit removed from my OO days, but what happened to United in Canada? They sent me to Winnipeg almost weekly, and if not there Regina, Saskatoon, London, even Thunder Bay. All gone! I think SkyWest then had the most transborder flights of any airline on the strength of the United network.

  2. In United’s press release, they mention “In 2019, the U.S.-Canada transborder market was the second largest international passenger air transportation market in the world and the largest international market for both Canada and the U.S., as measured by seats.” Do you have any idea what the largest international air transportation market would be?

    1. Angentenar – This is a great question. I started poking around at number of seats by market in 2019, and I think I found it. US-Canada had 19,853,547 seats in 2019 while… UK – Spain had 24,610,858. I would not have guessed that.

      1. The UK to Spain is a gigantic vacation market. That includes Palma de Majorca and the Canary Islands also.

        I also wonder where the US to Mexico falls on that list. It has got to be way up there.

      2. I need to find a good, fairly in-depth article or video that summarizes the history of Brits traveling/flying to Spain to escape the fog/rain and catch the sun.

        I believe that there was a huge push by UK packaged tour operators last century when air travel for the masses really took off, and I know that Spain & the Western Med isn’t a super long flight from the UK (London metro area looks to be roughly 900-1000 statute miles from southern Spain, so flights from UK to Spain are similar to the distance between the NYC area & Northeast US to the southern half of FL), but I’m very curious to learn more.

          1. Thanks, Ed. I’ll have to see if I can find a legal and free/cheap way to watch that series in the States.

            I’m not usually much for sitcoms, but there are several British comedy shows (Mock the Week, Taskmaster) that I’ve come to love after watching full episodes of them on YouTube…

            Still waiting for a UK comedian to start using local airports as the target for all the “bus replacement services” jokes that they like to make at the railways’ expense, but I imagine that will come soon enough.

  3. Does this require any DOT approval to deepen the relationship like this? I assume it’s DOT since it’s international but just generally wondering if it’ll have to go through any regulatory hurdles for AC/UA to do this.

    1. Julie – It doesn’t appear that way. The way I read this is that the current antitrust immunity for the Transatlantic JV covers this. Now, that doesn’t mean the feds couldn’t raise a stink, but still it’s interesting.

  4. The timing of expanding joint ventures seems to be poor given the proposed UA pilot contract that was put on the back burner so as to avoid being rejected. United already has its code on more transatlantic joint venture capacity than any other airline.
    Given that so much US-Canada flying is on regional jets, this is just a move to reduce capacity on United’s end as United pulls down its own RJ capacity.

    United says in its press release that the joint venture is subject to Canadian and US requirements so it is not just an unrestricted “bolt on” to its existing transatlantic joint venture with Air Canada.

    “Under the joint business agreement, subject to compliance with U.S. and Canadian regulatory and antitrust requirements, the two airlines will now be able to:….”

    1. I’m confused by your statement. It is poor timing given pilot negotiations but you see it as a plot to reduce regional jet capacity (which benefits mainline pilots)?

      1. United mainline pilots will not replace the regional jets and that is part of the intent; UA is anxious to make sure the capacity that regional jets fly to/from Canada are replaced by Air Canada, not United pilots.

    2. I would guess UA and AC have been working on this for some time and I would also bet that UA was hoping to have the pilot contract aspect signed off before this was announced, but you can’t wait forever.

      I would also suspect that if this using an existing agreement then the UA pilots should already have that factored into any contract agreement. Now, if this agreement requires more approvals then I can see it as a huge problem for UA. If UA did not cover themselves in this then that is a big management mis-step.

  5. I think the history on UA-AC transborder JV is a bit misleading.

    I seem to recall a transborder JV being approved many years ago with AC-UA (I think it was the pre-merger UA), and I want to say the approval was in the 2010-2012 timeframe. My understanding is that they never implemented it because they were disappointed in the carve-out routes that the regulators wouldn’t allow as part of the JV at the time (routes like ORD-YYZ, ORD-YYC, SFO-YYZ, etc. where UA/AC were basically the only players (at the time). Does anyone else recall this?

    As for now, I suspect any carve outs would be much more limited. Chicago-Toronto (including ORD/MDW-YYZ/YTZ), for example, has much more competition on it now with Porter, Flair and Swoop. All these carriers plus WestJet, and even some additional US carrier routes now (AA from PHX, JetBlue on NYC-YVR, etc.) make it less likely there would be as many carve-outs granted. Not that there aren’t some markets that might warrant it (SFO-YYZ nonstop is only AC and UA right now), but I think there is a lot more competition particularly on a lot of the relatively short-haul routes to Canada, IMO.

    We’ll see how this works out, I guess.

    1. +1. I recall the carve-outs as a huge deal (breaker) back when the original agreement was approved by regulators. Yes, it was pre-UA merger with CO. I want to say it even pre-dated the UA-US Air code-share.

  6. AC and UA will need to align the customer service side, that has always been a huge challenge when I have flown these 2 airlines.
    If everything goes of perfectly then it has been fine, but once weather or delays/cancellations come into play I have not had good times.
    According to one of my friends up north AC this summer is having a rough time, not sure it can be worse than UA, but what do I know

    1. I’ve flown Air Canada this summer. It’s an absolute train wreck operationally at Toronto and montreal. Roughly 30% only if their flights operate on time, and they have many cancels. It makes United’s, and any body’s operations elsewhere, look like they’re running perfectly. Would avoid Canada this summer unless there’s no other option. It’s simply a mess.

  7. Great article one thing that I have experienced….
    When booking an award, I use United to purchase AC tickets.
    I do this using Chase rewards.
    I get a meal in economy and selection that way for free. If I use AC miles which is usually more, I get nothing (meals and seat selection is extra).

    1. Do you mean free checked bag and seat selection? I just booked an AC award via UA today. Definitely comes with a free checked bag (actually, think its 2) and seat selection. But not aware of it including a meal. As far as I’m aware, free meals within North America can’t be had from a partner ticket…only via a lattitude fare from AC.

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