This story was updated on Friday, March 10 at 6:32 p.m. EST
Confirming earlier reports, the Government of Canada on Friday (March 10) officially approved the acquisition of Sunwing Vacations and Sunwing Airlines by WestJet Airlines.
In a March 10 press release, Minister of Transport Omar Alghabra said that following Transport Canada’s assessment of the public interest, which incorporated findings of the Commissioner of Competition, and consultations with Canadians, consumer protection groups, unions and industry, the Government of Canada will green light the transaction, which was first announced in March 2022.
The deal, however, is subject to strict terms and conditions “that are in the interest of Canadians,” the release says.
The decision to approve the acquisition “was not taken lightly,” said Transport Canada, noting the delays and bottlenecks experienced by travellers last summer, as well as the customer service challenges by Sunwing during the holidays.
The government considered a “broad range of 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,” Transport Canada stated. “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.”
Strict terms & conditions
The acquisition will result in enforceable terms and conditions intended to "protect the interests of travellers," Ottawa said.
This was expected given that the Competition Bureau, last October, raised concerns about the transaction.
The "strict" terms and conditions include:
- 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;
- Gradually ending Sunwing’s seasonal leasing practice to protect Canadian jobs.
The government added that it is working on “significant reforms” to the Air Passenger Protection Regulations “to ensure passenger rights are even more protected.”
“Today's decision was not taken lightly, especially in light of everything that happened over the holidays for those who flew with Sunwing,” stated Minister Alghabra. “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.”
Sunwing, founded in 2002, has headquarters in Toronto and a regional office in the Montreal area. The tour operator currently employs roughly 2,200 people.
Transport Canada noted that in the absence of 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."
WestJet, 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 its report last fall.
The marrying 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.
Sunwing & WestJet respond
In a statement PAX, 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 company 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 also issued a statement.
“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.