OTTAWA 鈥� The federal Competition Bureau has raised significant concerns about WestJet Airlines Ltd.'s proposed acquisition of Sunwing Vacations and Sunwing Airlines, saying the deal will likely result in higher prices and decreased service for Canadians.
In a report delivered to sa国际传媒's transport minister on Wednesday, the regulator said eliminating the rivalry between the two companies is likely to result in a substantial lessening or prevention of competition in the sale of vacation packages to Canadians.
"The proposed transaction will result in one of sa国际传媒鈥檚 largest integrated tour operators being acquired by one of its primary rivals in the provision of vacation packages," the report stated.
"Overall, WestJet and Sunwing account for approximately 37 per cent of non鈥搒top capacity between sa国际传媒 and sun destinations and 72 per cent of non鈥搒top capacity between Western sa国际传媒 and sun destinations."
WestJet announced a plan in March to buy Sunwing, a move that would bolster its holiday tour business. Financial terms of the agreement, which would see Sunwing's shareholders become equity holders in the WestJet Group, were not disclosed.
In its report, the Competition Bureau noted that a merger of the two carriers would create a monopoly on 16 routes between sa国际传媒 and Mexico or the Caribbean, and would lessen or prevent competition for the provision of vacation packages on 31 total routes between sa国际传媒 and Mexico or the Caribbean.
But in an emailed statement Wednesday, Sunwing spokeswoman Melanie Anne Filipp said the routes identified as concerns are predominantly in Western sa国际传媒 and account for a very small portion of Sunwing's operations 鈥� just over 10 per cent of all seats 鈥� and are primarily seasonal routes.
"Also of note, Sunwing no longer operates six of the routes mentioned in the report," Filipp said. "We remain confident that this transaction is good news for Canadians."
In a news release, WestJet said the proposed Sunwing transaction is a central piece of the Calgary-based airline's commitment to prioritize leisure and sun travel from coast to coast and increase affordable air and vacation package offerings for all Canadians.
Transport sa国际传媒 is also conducting a public interest review of the proposed transaction. The final decision regarding the deal will be made by cabinet, based on a recommendation from the minister.
WestJet said that decision will consider additional factors, including WestJet's promised preservation of Sunwing鈥檚 brand, its commitment to maintain Sunwing鈥檚 Toronto and Montreal offices, new flying that will be created by retaining Sunwing鈥檚 aircraft in sa国际传媒 year-round and the resulting new employment opportunities.聽
鈥淲e thank the Competition Bureau and welcome their report,鈥� said WestJet executive vice-president Angela Avery in the release. 鈥淲e look forward to bringing this transaction to life for the benefit of Canadian travellers, communities and employees.鈥�
The companies have said they expect the transaction to close by spring 2023, pending remaining regulatory and government approvals.
Robert Kokonis, president of Toronto-based consultancy AirTrav Inc., said he wasn't surprised that the Competition Bureau flagged issues with the proposed Sunwing-WestJet deal.聽
鈥淵ou knew before this whole process started that of course WestJet is the dominant player in Western sa国际传媒 and Sunwing is the largest package vacation company in the country, and the two together would be a more dominant force in the West," Kokonis said.
"But I鈥檇 prefer to see the government promoting competition in other ways. For example, creating the right regulatory environment for the creation of new carriers," he said.聽
Kokonis said there is nothing stopping another carrier from starting service on any of the routes that were flagged by the regulator for lack of competition.
He added the proposed acquisition of Sunwing is a major part of WestJet's plan to refocus its business in Western sa国际传媒, and said the deal will create a significant number of jobs in the West since it will turn seasonally operated aircraft into year-round jets. Currently, Sunwing meets seasonal demand by leasing the bulk of its fleet through the winter.
鈥淭he Competition Bureau's position here is likely going to be perceived as a swipe at Western sa国际传媒 by the central powers in Ontario and Quebec," Kokonis said.
This report by The Canadian Press was first published Oct. 26, 2022.
Amanda Stephenson, The Canadian Press
