Aviation expert breaks down approved WestJet-Sunwing deal: What’s next?

Federal government approves WestJet-Sunwing deal

OTTAWA — It’s official: the federal government has given WestJet the green light to acquire Sunwing Vacations and Sunwing Airlines.

Minister of Transport Omar Alghabra announced the news on March 10 following Transport Canada’s assessment of the public interest, which incorporated the findings of the Commissioner of Competition, as well as consultations with Canadians, consumer protection groups, unions and industry.

According to the Minister, the decision to approve the acquisition was “not taken lightly,” especially considering the delays and bottlenecks experienced by travellers last summer, as well as the customer service and communications challenges by Sunwing during the recent holiday season. The government considered a broad range of factors, such as levels of service, social and economic implications, the financial health of the air transportation sector, and competition.

“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. The agreement will also be accompanied by strict terms and conditions to ensure the public interest, including with regard to competition, connectivity and baggage handling,” said the Minister.

Given the current air sector landscape, The Minister noted that it was important to ensure that the final agreement offered the best possible outcome for Canadians. The acquisition will help maintain the stability of the sector as Sunwing will continue to provide more affordable vacation packages to Canadians, while being financially supported by WestJet.

The acquisition will also result in enforceable terms and conditions intended to protect the interests of travellers. These strict terms and conditions include:

  • Extending Sunwing vacation package offerings to five new Canadian cities;
  • Maintaining capacity on routes most affected by the merger;
  • Increasing regional connectivity;
  • Improving baggage handling for better passenger experience;
  • Maintaining a vacations business head office in the Toronto area and a regional office in the Montreal area for a minimum of five years;
  • Increasing net employment by 20 per cent over three years in the Toronto office;
  • Ensuring better passenger experience by investing in IT technology solutions to improve Sunwing’s communications;
  • Supplying airfare data on vacation packages for monitoring of post-acquisition price trends; and
  • Gradually ending Sunwing’s seasonal leasing practice to protect Canadian jobs.

The Government of Canada is also working on significant reforms to the Air Passenger Protection Regulations to ensure passenger rights are even more protected. These changes will place Canada at the forefront of passenger protections globally and, together with other steps to be taken, will help prevent the frustrating experiences of passengers last summer and over the holiday season.

As reported by Travelweek, the federal government’s approval of WestJet Group’s acquisition of Sunwing Vacations and Sunwing Airlines was expected to come as early as today, according to the Globe and Mail.

WestJet and Sunwing announced their potential deal in March 2022, just as Canada’s last travel restrictions were starting to lift.

At that time, the two companies said a new Toronto-based tour operating business unit would be created under the WestJet Group, to include both Sunwing Vacations and WestJet Vacations Inc., and led by Sunwing CEO Stephen Hunter. There was also word of a Quebec head office in Laval, while WestJet Group would maintain its headquarters in Calgary. The Sunwing brand would be marketed alongside WestJet Vacations.

Also part of the proposed deal, the WestJet Group of companies would expand to include Sunwing Airlines. According to the Group, this will add increased capacity, dedicating otherwise seasonal aircraft to operate year-round in Canada, instead of Sunwing supplementing seasonal demand with imported aircraft.

In the wake of the federal government’s March 10 green light, The WestJet Group issued a statement.

“We are pleased that the regulatory review of the transaction is now complete,” said Angela Avery, WestJet Group Executive Vice-President and Chief People, Corporate & Sustainability Officer.

“We thank the Minister of Transport and the Commissioner of Competition, and the staff of Transport Canada, the Competition Bureau, and the Canadian Transportation Agency, for their efforts to review the transaction.”

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