WestJet’s decision to shut down Sunwing Airlines to make it part of its core business will result in service cuts and fare hikes, particularly in western Canada and smaller cities across the country, experts said Monday.
Sunwing told employees on Wednesday that it would be absorbed by its new owner, less than a week after WestJet announced plans to close its low-cost airline Swoop.
Given the more limited flight options and more expensive tickets that are likely to come after former competitors merge, this latest move is bad news for consumers who want to fly to hotter destinations, argued John Gradek, who teaches in the aviation management program at McGill University.
“There will be a reduction in air services and there will be a corresponding increase in prices,” Mr. Gradek warned.
In an October report, the Competition Bureau said WestJet and Sunwing accounted for 37% of seat capacity on direct flights to sun destinations and 72% from Western Canada, according to a Bureau of competition published in October.
WestJet completed the acquisition of mainline Sunwing and Sunwing Vacations last month, part of a major consolidation of the Canadian aviation market. As a condition of Ottawa signing the agreement, the parties have committed to maintaining capacity on the most affected routes and to maintaining Sunwing Vacations’ head office in Toronto, as well as having a regional head office in Montreal. for at least five years.
WestJet confirmed in an email that Sunwing Vacations will continue as a separate entity, setting the stage for the Calgary-based carrier to fly Sunwing vacation package customers to their vacation spots.
Sunwing Vacations has been a price leader in the Canadian market, noted Gradek. “The question is how much WestJet charges Sunwing Vacations for the use of these planes. »
But aviation consultant Rick Erickson said he believed rival carriers would provide a healthy mix of competition for sun destinations, with some fares barely affected.
“I don’t think there will be a lot of changes, largely because consumers are pretty savvy, the Competition Bureau is monitoring (the situation) and there are other players in the market” , he estimated.
“Two big companies, Air Canada and Transat, are going to make sure that no profit comes back to WestJet because of this,” Erickson said, adding that low-cost carrier Flair Airlines, in the market for six years , also becomes “quite dynamic”.
Still, travelers in smaller markets from Saskatoon to St. John’s, Newfoundland and Labrador, may well have to shell out more, Erickson added.
“There could be problems in these markets,” he warned, referring to the markets of Kelowna and Prince George in British Columbia, Fredericton and Moncton in New Brunswick, and Waterloo and Windsor in southern Italy. Ontario.
In a memo to employees sent last week, Sunwing Airlines President Len Corrado said integration with WestJet, which acquired the low-cost carrier in May, is expected to take about two years, and that the transaction was part of a strategy to gain scale and growth opportunities.
WestJet spokeswoman Julia Kaiser said in an email on Saturday: “Our immediate focus remains the integration of Swoop’s highly successful business model into WestJet’s operations. »
Note to readers: Sunwing Airlines’ integration with WestJet is expected to take approximately two years once these efforts begin, not “within two years” as erroneously written in a previous version.