WestJet is shutting down Sunwing Airlines. What does that mean for consumers?

TORONTO –

Air journey trade observers say federal regulators ought to watch intently for shopper worth impacts as WestJet winds down Sunwing Airlines.

WHAT IS CHANGING?

WestJet accomplished its acquisition of Sunwing Airlines in May, and news broke this weekend that the bigger provider would shut down Toronto-based Sunwing in a bid to streamline its total operations.

The improvement got here shortly after WestJet stated it might additionally shut down and fold in operations at funds provider Swoop.

Calgary-based WestJet confirmed the adjustments to BNN Bloomberg, noting that journey tour operator Sunwing Vacations will proceed to run as a part of the WestJet Group.

“While we can confirm the eventual integration of Sunwing Airlines into WestJet, the anticipated timeline to do so has not been determined at this time,” spokesperson Julia Kaiser stated in an e mail. “Our immediate focus remains on the integration of Swoop’s highly successful business model across WestJet’s operations.”

John Gradek, school lecturer in aviation administration at McGill University, stated he sees the potential for steep worth hikes on the horizon, significantly relating to Sunwing Vacations because it takes on an much more outstanding place within the vacation-booking area.

“This has the potential to be a significant increase in pricing as a result of this consolidation,” he advised BNNBloomberg.ca in a telephone interview.

BNNBloomberg.ca has reached out to WestJet for additional remark.

In the speedy future, the mixing will principally have an effect on branding on the two airways, Gradek stated, “as the Sunwing colours and the Sunwing brand disappear.”

“It really is a way for WestJet to consolidate its operations and its overheads in managing an airline,” he stated, noting that the latest contract settlement with WestJet pilots involving important wage will increase might have put strain on the corporate to cut back different prices.

Gabor Lukacs, president of advocacy group Air Passenger Rights, stated the consolidation is a mere technicality after the federal authorities authorized the airline acquisition in March – a call he described as a “terrible mistake” that can end in much less competitors, increased costs and worse service for passengers.

“It is the government’s decision that needs to come under scrutiny,” he stated. “From WestJet’s perspective, they’re just doing what is logical and makes sense.”

In Lukacs’ view, essentially the most important anti-competitive injury to the air journey sector was accomplished at the moment of the federal approval, and the newest news concerning the business integration was predictable.

“It may have some slight impact in terms of marketing techniques, but in terms of economic processes, in terms of air travel market, it has no bearing on it,” he stated. “The moment Sunwing was purchased by WestJet, the competition ceased to exist.”

SUNWING VACATIONS

Sunwing Vacations will proceed to function beneath its personal title, and Gradek stated the success of that journey tour operator is probably going what attracted WestJet to Sunwing within the first place.

Gradek stated he expects WestJet may fold in its WestJet Vacations model with Sunwing Vacations, because the latter is a extra recognizable title that “has done a great job of positioning itself in the Canadian marketplace.”

“Sunwing will have a lot more opportunities to fly to different markets and increase their services, but the consumer will in fact be paying more for those services, because there’s less choice for the type of airplanes that are going to be required to operate those Sunwing Vacations holidays,” he stated.

PRICES AND OVERSIGHT

The federal authorities hooked up a number of circumstances to the WestJet-Sunwing sale, together with guidelines about sustaining business presence in Toronto and Montreal, maintaining capability on affected journey routes and defending Canadian jobs.

Gradek stated he’s eager to see how the federal government follows up on a situation that requires “supplying airfare data on vacation packages for monitoring of post-acquisition price trends.”

He stated he sees a threat that Sunwing might aggressively go after Transat, its important competitor within the vacation tour-booking area, and stated there must be oversight of “how much does the Canadian consumer have to bear in terms of the price increases” which will come up from the consolidation.

“To me, there has to be some statement from the federal government that they will keep an eye out on pricing, particularly for Sunwing Vacations in central Canada,” he stated. “I don’t hear any noise coming out of Ottawa that they might want to do that.”

Lukacs wish to see the federal government acknowledge it “messed up” in approving the sale, and take different measures to enhance competitors equivalent to permitting overseas airways to move extra passengers inside Canada.

A spokesperson for Transport Minister Omar Alghabra referenced the phrases and circumstances positioned on the sale, and stated any violation of these phrases “would be a violation of the merger agreement.”