Toronto travellers to have even fewer airline options as WestJet signs deal to buy Sunwing
Canada's already small (as in problematically small) pool of major airline carriers is about to get even smaller with WestJet's anticipated acquisition of Sunwing.
Promising "greater value and more sun destinations for Canadians," the WestJet Group of companies (headquartered in Calgary) announced Wednesday that it had reached a definitive agreement to buy both Sunwing Airlines and Sunwing Vacations (both based in Toronto) for an undisclosed amount.
"The transaction will bring together two distinctly Canadian travel and tourism success stories to deliver new travel options and greater value for travellers in the rapidly expanding leisure and work-from-anywhere travel market," reads a release from WestJet announcing the news.
"The combination will enable both companies to protect and create jobs and rebuild strength in the Canadian travel industry at a critical time."
It'll also eliminate any competition between the two carriers, which currently need to undercut one another (as well as a growing pool of other low-cost carriers) with better prices to attract customers.
Exactly. This is terrible for consumers. Sunwing offers lower cost vacation packages. That is now over— People who won’t wear masks are trash (@landlPM) March 2, 2022
One less airline means one less point of competition to balance out the industry — and Canadians know how expensive things can get when only a handful of huge companies control an entire market.
Customers are already starting to worry about how losing Sunwing, Canada's best-known low-cost carrier and Ontario's second-largest tour operator, could impact their future vacation plans.
"Westjet buying Sunwing is bad news," wrote one on Twitter when responding to the news. "Westjet is now a terrible airline and Sunwing isn't good either. The sum of the two airlines will likely give birth to a terrible airline. Also, far less competition for the customers so flying will be more expensive."
"Westjet bought Sunwing. Just as more independently owned airlines arise, more are getting bought out by the competitors," wrote another.
Once upon a time vacationers had more choices— JeannieLee@CBC (@JeannieLee88) March 2, 2022
Sunquest, RedTag, iTravel2000 have same owner
Conquest and Thomas Cook-RIP
And WestJet will buy Sunwing (which bought Signature and SellOff Vacations)
Will Air Canada try again to buy VAT?https://t.co/RayxPWAVge
The companies don't see it that way, however.
Rather, they say that expanding WestJet to include Sunwing Airlines will "add increased capacity, dedicating otherwise seasonal aircraft to operate year-round in Canada, instead of Sunwing supplementing seasonal demand with imported aircraft, which translates into more jobs for Canadians."
"This acquisition will improve the WestJet Group's ability to offer more affordable fares by immediately expanding its low-cost footprint in Canada."
Vacation packages will somehow get cheaper too, according to SunWing and Westjet, as Canadian travellers gain "more competitive airfares and affordable vacation packages through the combined strength of the companies."
Skeptics are calling upon different government agencies to ensure that everything's legit before the historic deal — which is still subject to regulatory approval — closes in late 2022.
@ISED_CA @TransportCA Will you be reviewing the proposed WestJet-SunWing dealnin terms of both competition and foreign ownership? https://t.co/ygXsNAAZ3r— Cory Boehm (@Cory_Boehm) March 2, 2022
Federal authorities have weighed in on the matter, ensuring that they are aware of the intended merger.
"The Competition Bureau acknowledges today's announcement of the proposed acquisition of Sunwing Airlines Inc. and Sunwing Vacations Inc. by the WestJet Group. The Bureau will review the proposed transaction," wrote the Competition Bureau of Canada in a news release Wednesday.
"Under the Competition Act, the Competition Bureau has a mandate to review mergers to determine whether they are likely to result in a substantial lessening or prevention of competition."
"The Bureau is required by law to conduct its merger reviews confidentially," it continues. "Should we determine that the proposed transaction is likely to harm competition, we will take appropriate action."
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