The Competition Bureau concerned about the purchase of Sunwing by WestJet

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Competition Bureau concerned about WestJet purchase of Sunwing

The airline WestJet announced in March its intention to buy the specialist in leisure travel Sunwing.

Air carrier WestJet's plan to acquire Sunwing Vacations and Sunwing Airlines will substantially reduce or prevent competition in the sale of vacation packages to Canadians, concludes a Competition Bureau report released Wednesday.

The independent body says eliminating rivalry between airlines and integrated tour operators would likely lead to higher prices, less choice and less service for Canadians.

It also indicates that it would likely cause a significant reduction in travel by Canadians on a variety of routes where their current flight networks overlap.

Specifically, a merger of the two carriers would create a monopoly on 16 routes between Canada and Mexico or the Caribbean, and reduce or prevent competition for the supply of vacation packages on a total of 31 routes between those same countries, the Bureau says. competition.

WestJet and Sunwing account for approximately 37% of non-stop travel between Canada and sun destinations and 72% of direct flights between Western Canada and sun destinations. sun.

WestJet announced plans in March to buy Sunwing, a move that would strengthen its presence in the leisure travel industry. Financial terms of the deal, which would see Sunwing shareholders become WestJet Group shareholders, were not disclosed. regulatory body, however, does not deter the air carrier. In a statement, WestJet Vice President Angela Avery said the group looks forward to completing this transaction for the benefit of travellers, communities and employees in Canada.

The carrier reminds that the report of the Competition Bureau is not binding. The final decision on the deal will be taken by Cabinet based on a recommendation from the Minister for Transport.

WestJet hopes other factors will weigh in in the balance such as the preservation of the Sunwing brand, the maintenance of Sunwing offices in Montreal and Toronto and potential employment.

The airline group also claims that the Canadian Transportation Agency gave it a positive opinion on the transaction a few days ago.

Under the Competition Act, the Bureau was mandated to review mergers to determine whether they will prevent or lessen competition.

In its aside, Sunwing spokeswoman Melanie Anne Filipp said the routes identified as being of concern were primarily in Western Canada, representing only a very small portion of Sunwing's business – little more than 10% of all seats – and were mostly seasonal routes.

It's also worth noting that Sunwing no longer operates six of the routes mentioned in the report, Filipp pointed out. We remain convinced that this transaction is good news for Canadians.

The Agency's report received by Radio-Canada shows that the regulator only determined that the corporate structure resulting from the acquisition will be Canadian within the meaning of the Canada Transportation Act.

The groups said they expect the transaction to close by the spring of 2023, pending remaining regulatory and governmental approvals.

The Chairman of the Toronto-based AirTrav consulting firm Robert Kokonis said he's not surprised the Competition Bureau is reporting issues with the proposed acquisition.

We knew before this whole process began that WestJet is the dominant player in Western Canada, that Sunwing is the largest vacation package company in the country, and that bringing the two together would be a stronger force. dominant in the west, Mr. Kokonis said.

“I would rather see the government promote the compete in other ways. For example, by generating the right regulatory environment for the creation of new carriers. »

— Robert Kokonis, president of Toronto-based consulting firm AirTrav

Mr. Kokonis noted that there was nothing stopping another carrier from launching service on one of the routes flagged by the regulator for lack of competition.

He added that the Sunwing acquisition proposal was an important part of WestJet's plan to refocus its business in Western Canada, and that the deal would create a significant number of new business opportunities. jobs in this region since airplanes operated seasonally would now be operated year-round.

Currently, Sunwing meets seasonal demand by leasing most of its fleet during the winter.

The position of the Competition Bureau is likely to be seen as a blow to Western Canada by the central powers of Ontario and Quebec, Kokonis said.

With information from La Presse&nbsp ;canadian

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