Purchase of Sunwing by WestJet |  Red lights for the competition, but not in Quebec

Purchase of Sunwing by WestJet | Red lights for the competition, but not in Quebec

Increased prices, loss of options and reduced services: These concerns raised by the Competition Bureau regarding WestJet’s purchase of Sunwing would not affect Quebec travelers if the transaction materializes.

Posted at 10:10 am
Updated at 14:03

Julien Arsenault

Julien Arsenault

The federal agency takes a dim view of this marriage since it would prevent or “significantly” reduce competition in 31 markets towards Mexico and the Caribbean. On 16 routes, WestJet would find itself in a monopoly situation.

However, the Quebec market, where Air Canada, Transat AT and Sunwing already compete in the leisure travel niche, does not appear on the Bureau’s list of places of concern. It is mainly in the West (Calgary/Edmonton/Saskatoon/Kelowna/Vancouver) that we fear the worst. Between Calgary and Cancun, for example, WestJet could control 80% of the winter market.

“WestJet’s presence is minimal in Montreal and the rest of Quebec, while at Sunwing it’s the opposite,” says Robert Kokonis, president of consultancy Air Trav. The merger has no impact on the Quebec market. »

Calgary-based WestJet, Canada’s second-largest airline, announced a deal last March to acquire Toronto-based Sunwing and Sunwing Vacations. Sunwing Vacations operates a regional headquarters in Laval. In Quebec, the company has approximately 570 employees. The amount of the transaction was not disclosed, as it involves two private companies.

fewer actors

The federal agency’s analysis is based on data collected before and after the COVID-19 pandemic. In the leisure travel segment, the combination of Sunwing and WestJet raises fears of an erosion of competition in western Canada, the Bureau notes.

Indirectly, Transat AT’s repositioning towards Montreal and eastern Canada appears to have influenced the Bureau’s analysis. The federal agency notes that the latter no longer offered flights to sunny destinations from Regina, Saskatoon and Kelowna.

“The contemplated transaction will result in the acquisition of one of the largest integrated tour operators in Canada (Sunwing) by one of its main rivals in the offer of vacation packages (WestJet)”, the document underlines.

Mr. Kokonis disagrees with some of the Office’s conclusions.

While acknowledging that the proposed transaction would consolidate the industry in certain markets, the expert believes that this would not impose barriers for potential new players.

“The list of low-cost airlines is growing in Canada,” says Mr. Kokonis. There are Flair Airlines, Canada Jetlines, Lynx Airlines and OWG. Nothing prevents these carriers from going, for example, to establish themselves in Winnipeg to offer flights and packages to Cancun. »

In a statement, WestJet recalled that the Bureau’s opinion was “non-binding” and that it was a document analyzed by Transport Minister Omar Alghabra, who should make a recommendation to the Trudeau government.

“The final decision, made by Cabinet, will take into account additional factors put forward by WestJet, including the preservation of the Sunwing brand, a commitment to retain Sunwing offices in Toronto and Montreal, and new flights to be created,” it said. the Calgary-based airline.

For its part, Sunwing limited itself to saying that the Bureau had not raised any concerns regarding Quebec.

other concerns

It is not just the Office that is concerned about the effects of WestJet’s purchase of Sunwing. Aéroports de Montréal (ADM) had called Transport Canada as part of its inquiries, concerned about possible losses of direct flights to Toronto.

For its part, Transat AT had picked up a criticism directed at its merger project with Air Canada before it was canceled last year: the consolidation of players in the airline industry in the sun destination segment. The tour operator says he wants to take the time to review the Bureau’s report, but believes the findings “seem to address the same concerns we have expressed in the past.”

WestJet and Sunwing estimate that their combination will be completed in the spring of 2023. Both companies must obtain all remaining regulatory and government approvals.

More information

  • CAD215 million
    Sunwing loss for fiscal year 2021

    source: tui group

#Purchase #Sunwing #WestJet #Red #lights #competition #Quebec

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