MONTREAL 鈥� WestJet's decision to bring Sunwing Airlines under its main banner could mean less service and higher fares 鈥� particularly in Western sa国际传媒 and smaller cities across the country, experts say.
Sunwing told employees it was being absorbed by its new owner on Wednesday, less than a week after WestJet announced plans to shutter discount subsidiary Swoop.
Given the narrower flight options and pricier tickets likely to result from the merger of former competitors, the latest move is "not good news鈥� for consumers looking to head to warmer getaways, said John Gradek, who teaches at McGill University's aviation management program.
鈥淭here will be a reduction in air services and there will be a corresponding increase in prices," Gradek said.
WestJet and Sunwing comprise 37 per cent of seat capacity on direct flights to sun destinations, and 72 per cent from Western sa国际传媒, according to an October report from the Competition Bureau.
WestJet completed its acquisition of Sunwing's main airline and vacation divisions last month in a major consolidation of the Canadian aviation market. As a condition of Ottawa's sign-off on the deal, the parties pledged to maintain capacity on the most affected routes and keep both the Sunwing Vacations head office in Toronto and a regional one in Montreal for at least five years.
WestJet Vacations and Sunwing Vacations will continue to operate independently under their respective brands, WestJet said in a press release Monday evening. Both vacation arms will expand their offerings and offer affordable packages from communities in sa国际传媒 on a year-round basis, which were previously seasonal, the company said.聽
鈥淔urthermore, through leveraging the ultra-low fare products pioneered by Swoop and affordable vacation packages offered by Sunwing Vacations, the WestJet Group will begin providing ultra-affordable fares and increased affordable vacation packages across sa国际传媒 through the entirety of its 180 aircraft,鈥� the company said.聽
Sunwing Vacations has been a price leader in the Canadian market, said Gradek. "The question is, how much does WestJet charge Sunwing Vacations for the use of those airplanes?"
But aviation consultant Rick Erickson said he thinks that rival carriers will ensure a healthy mix of competition for sun destinations, with some fares barely affected.
"I don't think there's going to be a great deal of change, largely because consumers are fairly savvy, the Competition Bureau's out there watching and there are other players in the market," he said.
"Two big ones, Air sa国际传媒 and Transat, are going to make sure that no glory profits are going to accrue to WestJet because of this," Erickson said, adding that six-year-old discount carrier Flair Airlines is also becoming "fairly aggressive."
Nonetheless, travellers in smaller markets ranging from Saskatoon to St. John's, N.L. may have to shell out more, said Erickson.
"There could be some issues in those marketplaces," he said, such as Kelowna and Prince George in sa国际传媒, Fredericton and Moncton in New Brunswick, and Waterloo and Windsor in southern Ontario. Fares to popular vacation spots have already been on the rise.
Out of more than 180 sun destinations 鈥� mostly in Mexico, California, Arizona, Florida and the Caribbean 鈥� prices went up in 87 per cent of cases between March 2022 and March 2023, according to aviation data firm Cirium.
The increases weren't small. Fares from sa国际传媒 to Key West, Fla., rose 23 per cent, and 27 per cent to Mexico City. They increased 28 per cent to Aruba and 40 per cent to Trinidad and Tobago. And they jumped by nearly a third for St. Petersburg, Fla., St. Lucia and St. Vincent.
At the moment, residents of Regina could book a December flight to Veradero, Cuba, on either WestJet or Sunwing. People in Moncton could head to Montego Bay, Jamaica, in February via either Sunwing or Air sa国际传媒. Those options could get slimmer.
"Sunwing flies similar routes to Swoop, such as Toronto-Cancun and Toronto-Punta Cana," said TD Cowen analyst Helane Becker in a research note.
Sunwing Airlines president Len Corrado told employees in a memo last week that the integration with WestJet 鈥渋s expected to take up to a couple years鈥� as part of a strategy to unlock greater scale and growth opportunities.
In the press release Monday evening, WestJet said that process won't begin before 2024, and Sunwing is currently 鈥渂usiness as usual.鈥澛�
WestJet spokeswoman Julia Kaiser said in an email Saturday: "Our immediate focus remains on the integration of Swoop's highly successful business model across WestJet's operations."
Workers were less confident, especially around union seniority. Other concerns include home bases and working conditions.
"Both pilot groups are naturally a little anxious on mergers," said Mark Taylor, president of Unifor's Sunwing pilots' group.
Acquisitions can raise big questions as each company's workers seek similar seniority, pay levels and benefits. Taylor and others pointed to the acrimony that erupted after Air sa国际传媒 acquired Canadian Airlines in 2001.
"People on either side were so angry it took a decade for the hostility to subside," he said in an email. "One bad arbitration can destroy some of the careers of one group."
Under a letter of understanding in the collective agreement ratified by WestJet and Swoop pilots this month, the company and the Air Line Pilots Association note the possibility of "changes required to integrate the Sunwing's pilots into the WestJet/Swoop bargaining unit," according to a copy of the deal obtained by The Canadian Press.
This report by The Canadian Press was first published June 19, 2023.
Companies in this story: (TSX:AC, TSX:TRZ)
Christopher Reynolds, The Canadian Press
Note to readers: This is a corrected story. A previous version incorrectly described the timeline given in a memo for Sunwing Airline's integration with WestJet as within two years. In fact, it is expected to take a couple of years from the start of integration efforts.
