WestJet’s acquisition of Sunwing and Sunwing Vacations, if materialised, will reduce competition in Canada’s sun destination niche, argues Transat AT.
Posted at 9:00 am
This criticism is included in a summary of the Montreal-based company’s observations submitted to and received by federal authorities The press, as part of the consultations that ended on July 22nd. Transat AT is addressing a criticism leveled at its plan to marry Air Canada before it was canceled last year: the consolidation of players in the airline industry.
“The proposed merger between WestJet and Sunwing would eliminate competition between two of the main holiday package providers in many sunny destinations, we read. It would eliminate the independent presence of Sunwing, an aggressive low-cost competitor on these routes. »
Transat AT is not the only one concerned. Aéroports de Montréal (ADM) also turned to Transport Canada. The nonprofit is particularly concerned that the merger will result in the loss of direct flights from Montreal-Trudeau to Toronto’s Pearson Airport, where WestJet is well established.
However, the summary of Air Transat’s parent company’s arguments does not contain any means to mitigate concentration risks in the airline industry. The tour operator cites the 2019 winter season, the last before the pandemic, to justify its fears.
So between 1ah November and April 30, 2019, Sunwing overlapped WestJet Vacations on 86% of its routes to sunny destinations, calculates Transat AT. The combination of the two companies would have resulted in a monopoly situation on 22 routes, particularly in Alberta and Saskatchewan.
Asked by The pressThe Quebec tour operator declined to comment on the contents of the document. Thursday afternoon, Transport Canada, WestJet and Sunwing did not respond to questions sent by The press. Transport Canada has until December 5 to submit its report to Federal Transport Minister Omar Alghabra. He will then make a recommendation to the cabinet.
Calgary-based WestJet announced an agreement to acquire Sunwing and Sunwing Vacations in March. The transaction, the price of which was not disclosed, would allow the country’s second-largest airline to expand its presence in the leisure travel sector, a niche in which the Quebec tour operator relies heavily.
Transat says that by eliminating the overlap between WestJet and Sunwing, there will be less competition, which there will be. However, I don’t understand as well why Transat fears that a competitor will be eliminated.
John Gradek, aviation expert and lecturer at McGill University
In announcing the merger, WestJet said that rivals Sunwing Vacations and WestJet Vacations would remain.
By positioning against the merger, the Quebec company echoes a tactic used by WestJet, which did the same when the marriage project between the tour operator and Air Canada was finally abandoned in April 2021 due to reluctance from the European Commission. including agreement was essential.
Last year, the Alberta-based company used consultations with Transport Canada to ask it to refuse Air Canada’s acquisition of Transat AT or to place several conditions because of concentration risks in the airline industry.
WestJet’s concerns have been viewed as valid by some observers. Before the health crisis, the combination would have had a 60% share of the transatlantic market out of Canada and overlapped with certain sunny destinations, in addition to controlling air traffic in Montreal.
Since Sunwing and WestJet’s activities are viewed by many analysts as more complementary, they feel the chances of a successful merger are higher.
- Year WestJet was founded. The company is currently owned by Toronto-based investment firm Onex.