How to deal with possible delayed baggage?

If you buy separate tickets and your baggage is delayed arriving to Rome, neither airline will deliver the luggage to you in Olbia free of charge. Air Canada won’t do it because their responsibility ends with getting it to Rome. The second airline won’t do it because it’s your responsibility to check in with it in Rome.

Luggage can usually transfer quicker than humans, so it’s possible that if you make the transfer your bags will too (and vice versa). If you’re concerned about it there seem to be a number of options, depending on your risk appetite:

1. Rebook the entire trip as a single booking (one PNR)

2. Contact Air Canada to ask what happens to your bags if the inbound flight is late and whether they will check your baggage through to Olbia if you’re on a separate booking with a different carrier

3. Change to a later connection in Montreal that allows for another Air Canada inbound arrival from Toronto after your own

4. Book the latest possible flight to Olbia on the day you land in Rome

5. Plan to spend a night or two in Rome

6. Book the separate flight and try not to worry

Clearly it’s important that you have adequate travel insurance for delayed/lost baggage.

You have a few options here

1. Meridiana flies three times a day from FCO to Olbia for around $100 one way. Same day tickets do not seem to be substantially more expensive (which they often are), so you can wait to book until you are sure you have your bags. You run the risk of a price increase or for being simply sold out.
2. Book a single YYZ to Olbia itinerary. Airline will deliver bags to any location that's reasonably close to your final destination (on the ticket). Granted, this may be expensive and/or impractical, since Olbia is not a well served airport
3. Budget for an extra day in Rome. If your bags get stuck in Montreal, they'll come on the next YUL to FCO flight which is probably 24 hours later. Check the schedule to confirm.
4. Chance it. An hour is not terrible, and if the flight is on time, your bags should make it easily
5. Change your long haul flight to one with a longer layover. Or non-stop: YYZ-FCO is well served

In addition to precautions around ticketing, to maximise your chances of the baggage doing what it's supposed to, it's always a good idea to have the bare essentials in your hand luggage.

This would typically mean at least a change of underwear/shirt, clothes for the destination climate if significantly different, the essentials to clean yourself, and any medication. You may have extra items to add depending on what you're doing when you arrive, and all this is in addition to the things you want or need to have in hand luggage anyway, such as valuables and fragile items. Even if you have plenty of money (accessible while travelling), it can be quite tricky to buy replacements for missing items if you arrive when the shops are shut, and/or are staying some distance from major stores.

Will the second airline deliver anyway even though it will be Air Canadas fault?

You have a contract with Air Canada that they will get you and your bags to Rome, and that's all that really matters to you. Most likely, it will be the second airline that actually delivers your bag, probably at Air Canada's expense, but the exact details of how that happens don't really matter from your point of view.

I'm not sure to what extent they're responsible for getting your bags to your final destination. However, it is completely normal for airline passengers to land in one place and then travel on to somewhere else. When my bag was delayed on a flight to London Heathrow, they were happy to deliver them to my home in Oxford, 70km away, no questions asked (apart from "Where should we bring your bag, sir?", of course). Your case involves more effort for the airline, but it's not your fault if they lose your bags so, morally speaking, why should you have to accommodate them? I'm not sure what the actual situation is, though.

TL;DR: Check with the carrier. Check their web page or call them. Based on their page Air Canada will most probably send the luggage to you. Consider also other option, especially flights operated by EU carriers as thy have additional regulations that protect you.

A general rule is that the carrier is liable for the luggage so it's best to go to the source: Air Canada's page about delayed luggage, where we read:

When we locate your bags

Once we've located your baggage and ensured it reaches its destination airport, it will be delivered to you via our contracted carrier in the area or FedEx.

It does not state that it will be delivered to an address outside the destination airport city but it also doesn't say the contrary and it's quite normal situation that you travel outside of your destination city. FedEx or other similar delivery services usually have uniform price across a whole country, so I doubt the airline will care if you're in Rome, Olbia or any other Italian city, as long as you stay within Italy.

Either way you can call the airline and ask them directly if they will deliver the lost luggage in case it is lost during your flight to Olbia. You don't need to explain how do you plan to get there as this is irrelevant for the carrier.

Note that the second carrier (from Rome to Olbia), be it Alitalia or some other line has no liability at all and will not deliver your luggage for sure. If the luggage came delayed to Rome you will not be able to check it in, so from their perspective you just fly without registered luggage. Note also, that you need to make sure you have enough time in Rome to pick your checked luggage and do the drop-off for the next airline.

Other options

Have you considered other options as well?

One that comes to my mind is flying with different carriers, most probably on different route. Is there any particular reason why you want to fly specifically through Rome or with Air Canada?

On Google flight search you have some options including those with just one stop in Europe. What's even more important - some flights are operated by European airline

Why is it important?

If you fly to EU with a carrier from EU there are additional rules that apply. The liability in such case is described on EU official passenger rights. What is important - when you fly from Canada those regulations apply only on EU based carrier:

EU air passenger rights apply:

• If your flight is within the EU and is operated either by an EU or a non-EU airline
• If your flight arrives in the EU from outside the EU and is operated by an EU airline
• If your flight departs from the EU to a non-EU country operated by an EU or a non-EU airline
• If you have not already received benefits (compensation, re-routing, assistance from the airline) for flight related problems for this journey under the relevant law of a non-EU country.

So it does e.g. on KLM flight, but not on the Air Canada one that you have picked. It is also important, that this is only about the airline that operates the flight, even if you bought tickets in code-sharing (it is both-ways, i.e. if you by a ticket from Air Canada but fly Lufthansa then rules apply, if it's the otherwise and your Lufthansa ticked end you up in Air Canada plane you're not eligible for those rules).

Your additional protection is then as follows:

Checked-in luggage

If your checked-in luggage is lost, damaged or delayed, the airline is liable and you're entitled to compensation up to an amount of approximately EUR 1 300.

The airline liability is not specified directly but in general it is any cost incurred by the source cause. So if you have to travel from Olbia to Rome and back to pick your luggage, you can reclaim this cost. If you have to buy spare clothes, you can reclaim that as well. Of course, you have to be reasonable. You don't take business class flight nor buy latest Gucci clothing.

Have you considered not checking the luggage at all and shipping it directly to your destination via fedex or other postal options?

This option has the benefit of being less stressful at the airport in general and something you can do ahead of time. Especially if it is cheaper than checked luggage fees.

As far as I see it, Air Canada's procedures regarding delayed baggage are that they will send it to you "via our contracted carrier in the area or FedEx." Since Olbia is in Italy just like Rome, it would be a national package (e.g. up to 30kg through PosteItaliane without surcharge), so I would only prepare for an additional day of delay (= have two sets of clothes in hand luggage, not one) while your baggage is taking the ferry to Sardinia.