Sunwing and WestJet issued quick responses to the report issued by Canada's Competition Bureau concerning the sale of Sunwing to WestJet.In its report to the Minister of Transport, Canada's Competition Bureau concluded that WestJet's proposed acquisition of Sunwing Vacations and Sunwing Airlines is likely to result in "a substantial lessening or prevention of competition in the sale of vacation packages to Canadians."
As Open Jaw reported, on 20MAY, 2022, the Minister of Transport started a public interest review of the proposed merger of the two operators. As part of the public interest review, the Commissioner of Competition is required to provide a report to the Minister on any concerns regarding potential prevention or lessening of competition that may occur as a result of the transaction.
According to the Competition Bureau, "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."
The Bureau's review determined that these effects would apply to 31 routes between Canada and Mexico or the Caribbean. The transaction also represents a merger of the only two integrated airlines and tour operators offering non-stop service on 16 of these routes. It noted that WestJet and Sunwing are the two largest operators to sun destinations from Western Canada.
The Competition Bureau noted it did "extensively" consider the impacts of the COVID-19 pandemic to identify concerns regarding the potential prevention or lessening of competition that may occur as a result of the proposed merger. The Bureau examined competition between WestJet and Sunwing's pre-pandemic networks as well as their current plans.
Sunwing's Response
In a statement to the media following the release of the Bureau's report on 26OCT, Sunwing asserts:
"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."
It clarified some of the Bureau's findings:
"The routes identified as concerns in the Bureau’s report are predominantly in Western Canada, account for a very small portion of Sunwing’s operations (just over 10% of all seats) and are primarily seasonal versus year-round routes. Also of note, Sunwing no longer operates six of the routes mentioned in the report."
But the operator seemed confident the sale would ultimately be approved:
"We look forward to the next steps in the regulatory process, including continued collaboration with Transport Canada to ensure a timely approval on the transaction.”
Transport Canada has until 05DEC, 2022 to complete its public interest assessment and provide it to the Minister.
WestJet's Response
WestJet issued its own comment following the Competition Bureau's report. It notes that the report is "advisory and non-binding," and also expresses confidence in the ultimate outcome of regulatory and government review of the proposed transaction.
WestJet notes that the final decision, "will consider additional factors presented in the WestJet Group's application, including the preservation of Sunwing's brand, the commitment to maintain Sunwing's Toronto and Montreal offices, new flying that will be created by retaining Sunwing's aircraft in Canada year-round and the resulting new employment opportunities.
"Separately, the Canadian Transportation Agency has issued its positive determination of the proposed transaction."
According to WestJet, the company expects the sale to close by spring 2023.
The final decision regarding the proposed transaction will be made by the federal Cabinet based on a recommendation from the Minister of Transport.
