WestJet buys Sunwing | Growing pressure for Transat

The pressure is mounting on Transat AT, which will see a strong rival emerge in leisure tourism, since WestJet will buy Sunwing and Sunwing Vacations, well established in Quebec, which houses its regional headquarters.

Julien Arsenault
The Press

Martin Vallieres
The Press

With the emergence of new players like Flair, Lynx Air and Porter’s expansionist ambitions, analysts do not believe that the consolidation announced on Wednesday will undermine competition and drive up ticket prices. However, they believe that the Quebec tour operator is caught between a rock and a hard place.

Sunwing Vacations President and CEO, Stephen Hunter, makes no bones about it: the company has every intention of putting down more roots in the province after the country’s second-largest airline officially takes it under its wing.

“We have the tool to accelerate our growth in Quebec, indicated Mr. Hunter, by videoconference with The Press with WestJet CEO Alexis von Hoensbroech. We have the capacity to accelerate our plans by a year or two. »

The purchase of Sunwing will allow WestJet to significantly increase its exposure in the leisure travel niche, a market prized by Transat AT and in which Air Canada Vacations is present. Companies like Flair also want to establish themselves in these destinations coveted by vacationers.

After two years of pandemic, Air Canada is also active in the transatlantic market, on which the parent company of Air Transat relies during the summer season, by starting to offer connections that were suspended due to the pandemic.

The largest airline in the country is also said to be in talks with Airbus to add Airbus A321LRs to its fleet – the aircraft on which Transat AT is relying for its take-off. If the rumor materializes, Mr. Kokonis believes that Air Canada could be tempted to play in the flowerbeds of the Quebec tour operator on certain European destinations.

A little more time

Aviation expert and lecturer at McGill University John Gradek believes Transat AT may have a tough time in the winter of 2023. Lynx Air may be keeping tabs on the leisure travel niche, says -he. To be spared, the tour operator based in Montreal must “create a fortress in Quebec,” says the expert.

“Things are starting to get serious for Transat in its traditional markets,” says Mr. Gradek. There will be more competition than before. »

Contrary to analysts, Transat AT argues that the merger between Sunwing and WestJet is not “good news” for consumers. The company, which saw its marriage to Air Canada called off just over a year ago, warns that there will be “diminished competition” to destinations like Mexico.

“We will examine the project in detail to assess its effects on the market and on Transat,” explained company spokesperson Christophe Hennebelle.

Unsurprised by the combination of WestJet and Sunwing, Stéphane Corbeil, president of the Quebec Regional Council of the Association of Canadian Travel Agencies (ACTA), believes that the new entity will have the means to enhance competition with Transat AT and Air Canada.

In business, Mr. Corbeil is co-owner and president of Club Voyages Dumoulin, which has four branches and around 100 employees in the metropolitan area. About 12,000 advisers and 1,500 travel agencies belong to ACTA. Some 1,500 advisers and 200 travel agencies are located in Quebec.

here for good

Based in Calgary, WestJet has approximately 8,500 employees and operates 180 aircraft. Sunwing, headquartered in Toronto, has an estimated workforce of 2,400. With just over 560 employees in Quebec, Sunwing Vacations operates a regional headquarters in Laval, inaugurated last September, which cost 15 million.

Mr. Hunter says there is no question of packing up or cutting Sunwing’s Quebec workforce.

“We may be coming to steal market share, but that’s not our goal,” said the boss of Sunwing Vacations. We are here to increase the number of travelers. »

Before the pandemic, Sunwing was present in Montreal and Quebec, in addition to offering service in the regions of Saguenay, Val-d’Or and Mont-Joli, recalls Mr. Hunter. Both companies promise “regional growth” in the province. They did not reveal their plan.

Under the agreement, WestJet will host a unit that will include Sunwing Vacations and WestJet Vacations. It will be led by Mr. Hunter.

The most recent attempt at consolidation in the airline industry had received an unfavorable welcome from the Competition Bureau of Canada, which was concerned about the overlaps of Transat AT and Air Canada in the transatlantic market and sun destinations. MM. Hunter and von Hoensbroech believe that this time the outcome will be different.

“We’re talking about a real merger of complementary activities, unlike some other companies that tried to associate with Montreal a few years ago,” said Mr. Hunter.

The two partners estimate that the transaction will be concluded within a year. Transport Minister Omar Alghabra’s office will have the final say.