WestJet takeover of Sunwing approved

MONTREAL –

The federal government on Friday cleared WestJet Airlines’ acquisition of Sunwing Airlines and Sunwing Vacations in a major consolidation of Canada’s aviation market after a tumultuous year for travel.

Proposed last March, Calgary-based WestJet will beef up its package vacation offerings as it adds the tour operator to its fleet, though the two brands will be sold separately.

Financial terms of the acquisition were not disclosed.

“Today’s decision was not taken lightly, especially in light of what happened over the holidays for those who flew Sunwing,” Transport Minister Omar Algabra said in a statement, referring to the travel chaos that erupted in December for crew due to shortages and bad weather. crippling most airlines, but leaving thousands of Sunwing passengers stranded in Mexico for days.

“After weighing the pros and cons, we’ve made a decision that will allow Sunwing to continue to provide affordable vacation packages to Canadians, create better jobs and protect current jobs as well as Canadians who have already purchased tickets.”

Last fall, the Competition Bureau warned that a takeover by Canada’s second-largest airline would likely lead to higher prices and reduced service, particularly around package deals.

The transport minister attached conditions to the acquisition that include expanding Sunwing’s packages to five new cities, maintaining capacity on the most affected routes and maintaining both the holiday business’ headquarters in Toronto and a regional office in Montreal for at least five years.

Other conditions include a demand to improve “regional connectivity” and baggage handling, to boost employment at Sunwing’s Toronto office and to “phase out” the practice of seasonal aircraft charters to protect jobs in Canada.

WestJet and Sunwing previously announced that their tours would be combined at the leisure carrier’s current home base of Toronto, while WestJet would operate Sunwing from its Calgary headquarters.

Both companies are privately held, with parent Sunwing Travel Group owned by the Hunter family and WestJet owned by Toronto-based investment manager Onex Corp., after the airline was acquired in a $5 billion deal in 2019. has sealed.

WestJet and Sunwing account for about 37 per cent of seats on non-stop flights between Canada and Sunwing destinations. That number rises to 72 per cent between Western Canada and the solar destinations, according to an October report by the competition bureau to the transportation minister.

“The proposed transaction would result in one of Canada’s largest integrated tour operators acquiring one of its major competitors in the package vacation industry,” the statement said.

The regulator said eliminating competition between the two would likely reduce or prevent competition in the sale of vacation packages to Canadians.

AirTrav Inc. consulting firm president Robert Kokonis said Westerners in particular might consider discount carriers like Flair Airlines and Lynx Air, which offer low-cost flights to sunny southern destinations but no package deals.

“Anytime you take away choice in the market, it can affect pricing. But I still think we have reasonable competition in the East,” he said, pointing to Air Canada Vacations and Air Transat.

“It will decrease somewhat in the West.”

Mark Taylor, president of the local union Unifor, which represents more than 400 Sunwing pilots, said he was worried about the implications of the deal for members.

“On the face of it, I would say that the terms offer us nothing and probably leave us a lot of room to grind,” he said, referring to contract negotiations with WestJet and Sunwing pilots.

“Sunwing has a unique working environment with many pilots based in Quebec City or Winnipeg or Edmonton,” he added, pointing to centralization as an industry trend. “The last thing we want is for anyone to have to work in Calgary or Toronto.”

This report by The Canadian Press was first published on March 10, 2023.