Ottawa greenlights WestJet’s takeover of Sunwing

MONTREAL –

The federal authorities gave the thumbs-up Friday to WestJet Airlines’ takeover of Sunwing Airlines and Sunwing Vacations in a significant consolidation of the Canadian aviation market following a tumultuous 12 months for journey.

Proposed final March, the takeover will see Calgary-based WestJet bolster its trip bundle choices because it provides the tour operator to its fleet, although the 2 manufacturers shall be marketed individually.

Financial phrases of the takeover haven’t been disclosed.

“Today’s decision was not taken lightly, especially in light of everything that happened over the holidays for those who flew with Sunwing,” Transport Minister Omar Alghabra mentioned in a press release, referring to journey chaos that erupted in December amid staffing shortfalls and poor climate, impairing most airways however leaving hundreds of Sunwing passengers stranded in Mexico for days.

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

Last fall the Competition Bureau warned that the acquisition by Canada’s second-biggest airline would probably lead to greater costs and decreased providers, notably round bundle offers.

The transport minister has connected situations to the acquisition that embrace extending Sunwing packages to 5 new cities, sustaining capability on essentially the most affected routes and retaining each a holidays business head workplace in Toronto and a regional one in Montreal for at the very least 5 years.

Among the opposite situations are a requirement to enhance “regional connectivity” and baggage dealing with, enhance employment at Sunwing’s Toronto workplace and “gradually” finish its seasonal plane-leasing observe to defend jobs in Canada.

WestJet and Sunwing have beforehand mentioned their tour operations shall be merged on the leisure provider’s present residence base of Toronto, whereas WestJet will handle Sunwing Airlines from its Calgary headquarters.

Both firms are personal outfits, with dad or mum Sunwing Travel Group majority-owned by the Hunter household and WestJet owned by Toronto-based funding supervisor Onex Corp. after it took the airline personal in a $5-billion deal in 2019.

WestJet and Sunwing comprise about 37 per cent of seat capability on continuous flights between Canada and solar locations. That quantity rises to 72 per cent between Western Canada and solar locations, the Competition Bureau mentioned in an October report delivered to the transport minister.

“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,” it acknowledged.

The regulator mentioned eliminating the rivalry between the 2 will probably cut back or forestall competitors within the sale of trip packages to Canadians.

Robert Kokonis, president of consulting agency AirTrav Inc., mentioned westerners in particularmay need to take into account low cost carriers similar to Flair Airlines and Lynx Air, which supply low cost flights to sunny southern locations however with out bundle choices.

“Any time you take away choice in a marketplace it might have an impact on pricing. But I still think we have a reasonable amount of competition in the east,” he mentioned, pointing to Air Canada Vacations and Air Transat.

“It’ll be somewhat diminished in the west.”

Mark Taylor, president of the Unifor union native that represents round 470 Sunwing pilots, mentioned he was anxious in regards to the implications of the deal for members.

“On first glance, I would say the conditions offer us nothing and likely leave us very exposed to whipsawing,” he mentioned, referring to contract negotiations with WestJet and Sunwing pilots. “It’s basically when two groups are played off against each other for the same work.”

He additionally mentioned that Sunwing pilots primarily based in cities similar to Quebec City, Winnipeg and Edmonton are anxious about extra centralized operations.

“The last thing we want is for everyone to have to work at Calgary or Toronto.”

Taylor mentioned it was “ridiculous” that the federal government has to mandate higher service as a part of its approval.

“The government’s already had the chance to do that, and they haven’t.”

Advocates have been calling for stricter enforcement of compensation guidelines when flights are cancelled.

The transport minister pledged in January to toughen air passenger protections following the uproar over jammed terminals, overflowing baggage halls and lots of of hundreds of flight cancellations final summer season and over the winter holidays.

Founded by Colin Hunter in 2002, Sunwing presently employs about 2,200 staff.

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