The Minister of Transport late Friday, 10MAR confirmed reports that Ottawa had approved the acquisition of Sunwing Vacations and Sunwing Airlines by WestJet.
In a statement, Omar Alghabra said the "decision was not taken lightly, especially in light of everything that happened over the holidays for those who flew with Sunwing. 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 regulatory approval process that included consultations with Canadians, consumer protection groups, unions and industry, as well as the findings of the Commissioner of Competition. As Open Jaw has reported, Canada's Competition Bureau expressed opposition to the takeover deal last OCT, warning of “substantial lessening or prevention of competition” in sales of vacation packages combining air and resorts stays on 31 routes it identified between Canada and the Caribbean and Mexico. The Competition Bureau contended that WestJet would "gain a monopoly" on 16 of those routes, and added that, in its estimation, "eliminating the rivalry between these integrated airlines and tour operators would likely result in increased prices, less choice and decreases in service for Canadians. It would also likely result in a significant reduction in travel by Canadians on a variety of routes where their existing travel networks overlap."
Sunwing and WestJet maintained confidence that the deal would be permitted by Ottawa, and Sunwing issued a statement in response to the Competition Bureau's concerns, saying, "We remain confident that this transaction is good news for Canadians. The combination of WestJet’s and Sunwing’s complementary businesses will deliver more affordable vacation packages and competitive airfares, while enabling us to protect and create jobs at a critical time for the travel industry."
While permitting the acquisition to go ahead, Ottawa says the deal will be "subject to strict terms and conditions that are in the interest of Canadians."
In its statement confirming the acquisition could move forward, "determining the proposed purchase is in the public interest," the government says it considered factors such as levels of service, social and economic implications, the financial health of the air transportation sector, and competition.
"Given the current air sector landscape, it was important to ensure that the final agreement offered the best possible outcome for Canadians," the transport minister's statement said. "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."
Alghabra added, "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."
It provided a list of "strict and "enforceable terms and conditions intended to protect the interests of travellers," including:
- 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.