AC must be thinking hard as we speak, or maybe they have decided already.

Porter has had the 'basic' category fare (no carry on) for a while. Westjet has just followed them, I'd gather. Such a move puts them firmly into the so called 'low cost', 'lower class' category and some travellers, myself included will perhaps think twice before booking with them. You can already find assorted complaints on the Westjet forum. For the same reason, I usually pay a little bit more to travel to Europe on BA (1st choice) or AC/LH (2nd choice). In the long run, it has paid off for me in terms of flight experience, benefits offered, delays/ flight cancellations handling.

As it happened, last weekend I travelled from YUL to YVR outbound on AC in fabulous 787-9 Premium economy, inbound on Porter Emb 95 in Reserve - what they call their premium economy, since I was curious to try it and got a great deal during one of those recent seat sales. While Emb 95 has some merits, and 2x2 seating is one of them, unless really low price, I would not run and re-try the Reserve again. First row (bulkhead) seating is fine with more legroom but far cry from AC Premium. The staff on ground and in flight was very good to excellent, the food was nothing special. And they use lots of single use packaging not great for the environment. Both flights were full.

Here are my 2 cents worth of wisdom: AC, please do not follow this trap. Just keep the basic fare $10-15 higher then Westjet/Porter, allow a carry on a per stated limits and use of status/cc benefits. You are smart enough to come up with a way how to use this to your competitive advantage. AC is - in my books - still the best Canadian airline and I wish it will stay in that category in the future.