“An important milestone.”
That’s the phrase both Sunwing and WestJet used on Friday (March 10) after WestJet Airlines got the government green light for its takeover of Sunwing Airlines and Sunwing Vacations – with conditions.
Releasing a statement to PAX not long after Ottawa made its announcement, Sunwing said this week "marks an important milestone as regulatory reviews are complete, bringing us one step closer to finalizing the transaction."
"We thank Government of Canada officials, including the Minister of Transport, for their efforts in reviewing the transaction and their determination that it’s in the public interest, subject to certain measures imposed in the Government of Canada’s order," the tour operator said. "We look forward to closing the transaction in the weeks ahead and officially joining the WestJet Group.”
“On closing, it will be business as usual at Sunwing and there will be no impact to our customers’ vacations.”
WestJet has also responded to the big news.
“We are pleased that the regulatory review of the transaction is now complete” said Angela Avery, WestJet Group executive vice-president and chief people, corporate and sustainability officer. “We thank the Minister of Transport and the Commissioner of Competition, and the staff of Transport Canada, the Competition Bureau, and the Canadian Transportation Agency, for their efforts to review the transaction.”
The issuance of the order is an "important milestone" in the process toward closing the transaction, the airline said.
The decision “was not taken lightly”
In a press release issued late Friday afternoon, Transport Minister Omar Alghabra said the decision to approve the transaction, which was first announced in March 2022, “was not taken lightly.”
“Especially in light of everything that happened over the holidays for those who flew with Sunwing,” Minister Alghabra said. “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 agreement will also be accompanied by strict terms and conditions to ensure the public interest, including with regard to competition, connectivity and baggage handling.”
Conditions include extending Sunwing vacation offerings to five new Canadian cities, keeping capacity on routes most affected by the merger, maintaining a vacations head office in the Toronto area and a regional office in the Montreal area for a minimum of five years; and increasing net employment by 20 per cent over three years in Toronto.
The deal is also contingent on ensuring technology solutions that improve Sunwing’s communications (which was a point of contention for customers who faced delays and cancellations during the winter holiday period).
Sunwing must also gradually end its seasonal leasing practice to protect Canadian jobs, Ottawa said.
Competition vs. stability
WestJet, which is owned by Onex Corp., and Sunwing account for roughly 37 per cent of non–stop capacity between Canada and sun destinations and 72 per cent of non–stop capacity between Western Canada and sun destinations, the Competition Bureau found in a report last October.
In fact, the Bureau raised concerns about the transaction, saying that it would result in a “substantial lessening” of competition in the sale of vacation packages to Canadians.
“Eliminating the rivalry between these integrated airlines and tour operators would likely result in increased prices, less choice and decreases in service for Canadians,” the Bureau wrote at the time.
In the end, Transport Canada said that without the acquisition, Canada’s air transport sector "could have faced greater instability, including job losses, a significant reduction of affordable vacation offerings, negative impacts on passengers, and the Government not being repaid sizable loans."
The department said Sunwing will continue to provide more affordable vacation packages to Canadians, "while being financially supported by WestJet.”
The merging of WestJet and Sunwing was originally positioned as a move that would keep business competitive as low-cost carriers increase their presence in the Canadian marketplace.
The deal is set to increase WestJet’s reach to sun destinations and European cities while expanding the brand’s presence in Eastern Canada.
Both companies previously stated that the two brands will be marketed separately.