Ottawa approves transaction between WestJet and Sunwing
Air carrier WestJet is authorized by the federal government to acquire its competitor Sunwing.
Federal Transport Minister Omar Alghabra has approved the purchase of Sunwing by WestJet, despite concerns expressed by the Competition Bureau.
Minister Alghabra, however, points out that writes that this decision was not taken lightly, especially given the delays and bottlenecks the traveling public experienced last summer, as well as Sunwing's difficulties in customer service and communications during the recent holiday season.
In March 2022, WestJet and Sunwing reached a definitive agreement for the Calgary airline to purchase Sunwing Vacations and Sunwing Airlines.
The amount of the transaction was not disclosed, being neither company is publicly traded.
According to the two companies, this acquisition will protect and create jobs, while providing travel amenities or work at more competitive prices.
This transaction allows WestJet to pursue its expansion plans, which include the creation of a new entity that will include Sunwing Vacations and WestJet Vacations.
Ministry of Transportation release says that this acquisition also entails the application of terms and conditions to protect the interests of travellers. The strict terms of the acquisition include:
- expanding Sunwing vacation package offerings to five additional Canadian cities;
- improving Sunwing communications;
- increasing connectivity between regions;
- the maintenance of capacity on the air routes most affected by the merger;
- the communication of data on the airfares of holiday packages for monitoring of the evolution of prices after acquisition;
- the 20% increase in net employment in the Toronto office over a three-year period.
< li>improving baggage handling;
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The federal government is, however, attaching certain restrictions to this transaction aimed at maintaining competition in the vacation package sector.
The Commissioner of Canada's Competition Bureau had indeed pointed out, in his report presented to Transport Canada Minister Omar Alghabra last October, that the merger would reduce or eliminate competition on 31 routes between Canada and Mexico or the Caribbean.< /p>
According to the report, the elimination of competition between WestJet and Sunwing is likely to have several effects, such as an increase in prices and a unification ormization of travel choices. The consequence would be that Canadians travel less.