The Canadian Transportation Agency has ruled the two airlines must protect passengers who are allergic to cats.
It's suggesting either a ban on cats aboard flights carrying allergic passengers or cat-free buffer zones and effective ventilation.
It says the airlines can also come up with their own solutions, but they will have to be equally effective.
The ruling follows complaints from three allergic passengers. The agency ruled almost three years ago that the three would be formally considered as people with disabilities under the law. It then considered whether the airline policies on cats constituted an obstacle to their mobility rights.
The agency consulted the airlines, a number of experts and various interested agencies, including the Asthma Society of Canada and the Canadian Lung Association.
It finally ruled this week in a lengthy document which set out the arguments and cited expert opinions and the legal background.
"The agency therefore finds that the respondents' current pet policies, as they relate to the carriage of cats in the aircraft cabin in which a person with a disability as a result of their allergy to cats is travelling, constitute an obstacle to the mobility of the applicants," the ruling said.
The airlines are required to advise the agency within 30 days whether or not they intend to implement one of two proposed solutions.
One plan would ban cats from an aircraft cabin in which a person with a cat allergy is travelling.
The second would require "air circulation-ventilation systems using HEPA filters or which provide 100 per cent un-recirculated fresh air" and a cat-free buffer zone of at least five rows of seats.
Nothing will happen right away.
If the airlines accept one of the solutions, they have 45 days to submit a formal policy. If they reject them, they have 45 days to come up with an equally effective proposal of their own.
Air Canada and WestJet both said they are studying the ruling.
Both airlines now allow small pets to travel in the cabin on many flights, although not on some international routes. Air Canada allows up to four cats or dogs per flight, WestJet sets a limit of two, but allows birds and rabbits as well. Different policies apply to service animals.
The two said they make efforts to accommodate passengers with pet allergies and will re-book flights if necessary.
The asthma society welcomed the agency's ruling.
"This is a victory for allergy and asthma sufferers," society president Robert Oliphant said in a news release.
"We are pleased that the CTA has chosen to adopt our recommendations which will ensure people with severe asthma may travel safely on airplanes."
The agency said the ruling deals only with cats because the three people who originally complained were specifically concerned about cats.
"Additionally, their medical evidence is insufficient to support claims of allergies to other pets, such as dogs, that are allowed to be carried in the aircraft cabin," the ruling said.
The agency is a quasi-judicial body. It is responsible for economic regulation of federal air, rail and marine transportation. It also serves as a referee to resolve complaints about transport services, fees and charges and is responsible for ensuring that the national transport system is accessible to all.