WestJet Group announced on May 1 that it completed the acquisition of Sunwing Vacations and Sunwing Airlines. The transaction, originally announced in March 2022, raised concerns with the government entity in charge of regulating this type of operations, although WestJet stated that it would benefit air travel in Canada.
WestJet emphasized that it will respect all agreements reached with unions and employee associations, both those in force and those under negotiation.
The social and economic impact of the COVID-19 health crisis led Canadian airlines to negotiate mergers, partly to protect jobs. Sunwing and WestJet in 2022; and in 2021 between Air Transat and Air Canada. But both mergers were not immune to public opinion.
The Merger of Sunwing and WestJet
Initially, Sunwing Airlines, Sunwing Vacation, Westjet and Westjet Vacations will continue with separate operations, maintaining their role in the Canadian market. The merger aims to increase their operations in leisure and sun destinations, where Sunwing is a leader in the vacation market with more than 100 seasonal routes from across Canada to Mexico, Central America and the Caribbean.
On Sunwing Airlines’ side, it will allow it to add capacity by dedicating aircraft that normally serve seasonal traffic to its year-round domestic operation in Canada, while avoiding the need for it to supplement seasonal peaks with foreign aircraft.
«As we have set out our new strategic path for WestJet Group, investing more in leisure and sunshine in Canada is a key driver for growth,» said Alexis von Hoensbroech, WestJet Group chief executive officer.
WestJet Group stated that it would retain Sunwing’s 2,000 employees and, in addition, would add the leisure airline’s 18 Boeing 737s to its fleet.
Stephen Hunter, former chief executive officer of Sunwing Vacations, has been named chief executive officer of WestJet Group’s Vacations Business, responsible for all travel operating and vacation package businesses for the Sunwing Vacations and WestJet Vacations brands.
«We are pleased to welcome Sunwing employees to the WestJet Group of companies; throughout the planning of this transaction, we have been continually impressed with their expertise and experience in the vacation industry,» von Hoensbroech concluded.
See also: Competition Bureau expresses concern over Sunwing-WestJet merger
Government, Airports, and Airlines Oppose the Merger
Canada’s Competition Bureau expressed concerns about the proposed acquisition, suggesting the deal could lead to higher prices for customers and a decrease in available service. In a report, it stated that the end of competition between the two companies could lead to a substantial decrease in competition in the package holiday market.
See also: Airports and airlines oppose merger between Sunwing and WestJet
This is not the first expression of an industry player in that sense: Air Transat, the country’s third largest airline, pointed out that, should the merger be completed, it will reduce competition in the leisure travel market. For its part, Aéroports de Montréal (ADM), which manages the airports serving the city of Montréal, made official its concern about the possible decrease in Sunwing’s activity at Pierre Elliott Trudeau International Airport (YUL).
According to the 2023 schedule obtained through Cirium, Sunwing and Westjet account for 45% of the total nonstop capacity between Canada and major leisure destinations in Mexico, Central America and the Caribbean. In addition, they offer about 71% of the total capacity between Western Canada and the most popular vacation destinations among Canadians.
WestJet and Sunwing: Company Profiles
WestJet, based in Calgary, operates a fleet of 112 aircraft (41 B737-700s, 24 B737-8s, 40 B737-800s and 7 B787-9s). Its regional subsidiary WestJet Encore operates 47 DHC-8-Q400s and 5 Saab 340s for WestJet Link; and its ultra low-cost subsidiary Swoop has 10 Boeing 737-800s and 6 Boeing 737-8s. According to the airline’s latest reports, it has 54 B737-10s, 32 B737-7s and 19 B737-8s pending delivery.
According to information obtained through Cirium, in 2022 WestJet had a supply of 20.9 million seats, ranking second in the Canadian market. Its low-cost subsidiary is positioned sixth, having served 2.7 million passengers in the same year.
Sunwing Airlines operates a fleet of 8 B737-8s and 10 B737-800s. During the summer and winter seasons, it hires more aircraft from other airlines on a wet-leasing basis. In 2022, it ranked seventh with a supply of 2.4 million seats.
In conclusion, the acquisition of Sunwing by WestJet Group has both supporters and critics. While the merger aims to enhance operations and expand their market presence, concerns regarding decreased competition, higher prices, and reduced services for consumers persist. As the airline industry continues to navigate the effects of the COVID-19 pandemic, the full implications of this acquisition remain to be seen.
