Canada’s Competition Bureau says it is concerned that WestJet’s proposed acquisition of Sunwing Vacations and Sunwing Airlines would result in higher prices and less choice for travellers. The carriers disagreed and, in responses to the regulator’s report on the proposed transaction, both airlines maintained the deal would benefit Canadian travellers, communities, and employees.
In the report, delivered to the Minister of Transport on Wednesday, the Competition Bureau said that eliminating the rivalry between the integrated airlines and tour operators would likely lead to a substantial lessening or prevention of competition in the sale of vacation packages along with a significant reduction in travel by Canadians on a variety of routes where their existing travel networks overlap.
“The proposed transaction will result in one of Canada’s largest integrated tour operators being acquired by one of its primary rivals in the provision of vacation packages,” the report stated. “Overall, WestJet and Sunwing account for approximately 37% of non-stop capacity between Canada and sun destinations and 72% of non-stop capacity between Western Canada and sun destinations.”
The Competition Bureau said that a merger of the two carriers would create a monopoly on 16 routes between Canada and Mexico or the Caribbean, and would lessen or prevent competition for the provision of vacation packages on 31 total routes between Canada and Mexico or the Caribbean.
WestJet responded that its application promised the preservation of Sunwing’s brand, a commitment to maintain Sunwing’s Toronto and Montreal offices, new flying created by retaining Sunwing’s aircraft in Canada year-round, and the resulting new employment opportunities.
When the plan to buy Sunwing was announced in March, WestJet touted, “access to more competitive airfares and affordable vacation packages (for travellers) through the combined strength of the companies.”
In a statement, Sunwing spokeswoman Melanie Anne Filipp said, “The routes identified as concerns in the Bureau’s report are predominantly in Western Canada, account for a very small portion of Sunwing’s operations (just over 10% of all seats), and are primarily seasonal versus year-round routes. Also of note, Sunwing no longer operates six of the routes mentioned in the report.”
“We remain confident that this transaction is good news for Canadians. The combination of WestJet’s and Sunwing’s complementary businesses will deliver more affordable vacation packages and competitive airfares, while enabling us to protect and create jobs at a critical time for the travel industry.”
Noting that the regulator’s report is non-binding, WestJet says it expects the deal to close by spring 2023 pending remaining regulatory and government approvals.
“We thank the Competition Bureau and welcome their report,” said WestJet executive vice-president Angela Avery in the release. “We look forward to bringing this transaction to life for the benefit of Canadian travellers, communities and employees.”
The companies have said they expect the transaction to close by spring 2023, pending remaining regulatory and government approvals.
Transport Canada is also conducting a public interest review of the proposed transaction, but a final decision will be made by cabinet, based on a recommendation from the minister.