Air Canada Removes Free Carry-Ons from Economy Basic, Joining the ULCC Playbook

Air Canada's January 3, 2025 policy change moved the country's largest carrier meaningfully closer to the ultra-low-cost carrier model that had long defined European budget aviation. By stripping the free carry-on allowance from Economy Basic fares on North American and sun destination routes, Air Canada introduced a two-tier hand luggage system where the lowest fare buys only under-seat personal item space, and overhead bin access requires either a fare upgrade or an additional payment.

The announcement landed at the very start of a new year, before most travellers had begun booking for the spring and summer seasons. That timing was almost certainly deliberate: resetting fare expectations early in the booking window, before the comparison shopping that drives holiday travel bookings, gives the airline the maximum runway to normalise the new structure before travellers have made commitments based on the old one.

What Economy Basic Now Includes

Before January 3, 2025, Air Canada's Economy Basic fare included one personal item and one carry-on bag, making it comparable in luggage allowance to the basic economy products of American, Delta, and United on domestic routes, though less permissive than some. The January change stripped carry-on access from the fare, leaving Economy Basic with only the personal item.

The personal item on Air Canada has strict dimensions: 33 x 43 x 16 cm (13 x 17 x 6.3 in.). This is notably smaller than the personal item dimensions many airlines allow and smaller than the under-seat space on some aircraft types. Travellers planning to book Economy Basic should measure their intended personal item against these dimensions carefully, since a bag that fits under the seat on another carrier may not comply with Air Canada's specific standard.

The table above illustrates the baggage structure across Air Canada's main fare tiers. The core commercial logic is visible in how carry-on access differentiates Economy Basic from Economy Standard: the carry-on restriction is the primary justification for the price difference between those two fare classes, making the decision between them primarily a question of how the traveller plans to pack.

For a solo traveller on a two-night trip who can genuinely fit everything into a 33 x 43 x 16 cm personal item, Economy Basic remains a viable option. For anyone carrying more than that, the practical choice is between paying to add a carry-on, checking a bag, or booking Economy Standard from the outset. When the price difference between Economy Basic and Economy Standard is close to the carry-on add-on fee, the Standard fare typically represents better value.

The ULCC Playbook Comes to a Legacy Carrier

The business logic behind Air Canada's change is well documented in European aviation. Ryanair adopted a similar carry-on restriction model in 2018, and the measurable effect was an improvement in average yield per passenger as a portion of travellers who compared the fare tiers chose to pay up rather than accept the personal-item-only restriction. Wizz Air and other European ultra-low-cost carriers followed, and the structure is now standard across the European budget aviation market.

For Air Canada, the adoption of this model represents a strategic repositioning of its lowest fare tier as a product genuinely competitive with budget carriers on price, but stripped of the bundled amenities that had historically distinguished legacy carrier economy from ULCC economy. The airline is, in effect, creating an internal competitor to Spirit and Frontier within its own fare structure, targeting the price-comparison segment while maintaining a premium-valued Standard product for the segment that values convenience.

The policy applies on North American routes, including Canada-U.S. transborder flying and Caribbean and Mexico sun destinations. Transatlantic and transpacific routes, where Air Canada competes with European and Asian carriers that typically include carry-on allowances in all economy fares, were not subject to the January 2025 change. This geographical targeting suggests a deliberate decision to adopt ULCC tactics specifically in markets where low-cost carrier competition is most direct.

Who Is Exempt

Aeroplan elite members retain their carry-on privileges regardless of which fare class they book. This exemption is structurally important for the loyalty program's value proposition: frequent Air Canada travellers who have invested in accumulating Aeroplan status should not be penalised by a fare restructuring aimed at casual or occasional travellers. Removing carry-on access from status members would have created a significant defection risk for Air Canada's most profitable customer segment.

Air Canada's co-branded credit card products also provide carry-on exemptions at certain tier levels, mirroring the exemption structure used by U.S. carriers. Travellers who hold a qualifying Air Canada card and book Economy Basic retain overhead bin access, making the card's carry-on benefit the primary financial justification for holding it on North American routes.

For travellers without elite status or a qualifying card who regularly book the cheapest available fare, the January 2025 change requires a recalculation of total trip cost. The $35 or more carry-on add-on fee, if applicable on each leg of a round trip, means the fare comparison between Air Canada Economy Basic and Air Canada Economy Standard should always include the expected baggage cost at the Economy Basic rate before a booking decision is made.

Practical Advice for Air Canada Travellers in 2025

The first and most important adjustment for any Air Canada traveller after January 2025 is to stop assuming that buying a ticket includes a carry-on. That assumption was valid for every major Canadian carrier until this change, and it will be wrong on Economy Basic from this point forward. Check the fare class at booking, verify what luggage is included, and add carry-on allowance if needed at the time of purchase rather than at the airport, where add-on fees are typically higher.

The second adjustment concerns personal item dimensions. Air Canada's 33 x 43 x 16 cm standard is strict, and a bag that passes as a personal item on United, Delta, or Southwest may not meet Air Canada's measurement. The vertical dimension of 43 cm is particularly constraining for laptop backpacks, many of which are designed to hold a 15 or 16-inch laptop and exceed that height. Measuring your intended personal item against Air Canada's specific standard before travel is a necessary step for Economy Basic bookings.

For travellers who pack heavy or who use their carry-on as a primary travel bag, the honest analysis may be that Economy Standard is the appropriate fare for Air Canada travel. At fare differences of $20 to $50, the carry-on inclusion often makes Standard the better total cost option once the add-on fee is factored in.

Air Canada's January 2025 change is a clear signal that the unbundling of economy cabin services is not a U.S.-only or European-only phenomenon. It has arrived in Canada, and the pattern it follows has been well established by carriers in other markets. Travellers who adapt their planning habits to account for the new structure will navigate it efficiently. Those who assume the old rules still apply will encounter the surprise at the gate that airlines, to their financial benefit, are counting on.