07.22
22

Flights from Vancouver: WestJet announces Sunwing merger – Vancouver Is Awesome

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The merger could potentially drive up flight prices -- but the government wants to hear what you have to say!

Do you find it hard to save up for sunny vacations down south?

While there are several vacation packagesavailable for locals looking to escape "Raincouver" during the winter, not all of them are affordable. And many of the more economical optionsdon't feature properties you'd feel comfortable staying at (unless you are comfortable with letting the bed bugs bite).

In March, WestJet, Canada'ssecond-largest airline, announced thatit willbe acquiring Sunwing Vacations and Sunwing Airlines. It said it would createa new tour operating business that will includeboth Sunwing Vacations and WestJet Vacations Inc.

The airline said the merger will provide travellers with more "competitive airfares and affordable vacation packages."

But many Canadians worrythat the proposed merger will have a negativeimpact on the travel industry.

In a tweet, alocal woman quipped:"yay, less choice. Always great for the people of Canada." Similarly, one personasked if the competition bureau is "[okay] with this fiasco," adding that "people can't get any service from WestJet now" and that "this will be brutal for the consumers."

In May 2020,WestJetlaidoff 3,000 people and cancelled over4,000 domestic flights weekly as the COVID-19 pandemic hammered the airline industry. Many people expressed frustration when the airline announced a ramped-up summer schedule despite not yet refunding thousands of people's airfare that was unexpectedlycancelled.

An exasperated Canadian travellerwrote: "You're able to afford to buy Sunwing but can't refund people's flights and vacations because it was cancelled due to COVID. Give people back their money."

Transport Canada isasking for the public'sinput on theproposed acquisition andif it willpositively or negatively affect the air travel experience for Canadians. Input from the Commissioner of Competition on howcould it could impact competition in the air sectorwill also be included.

The consultation will close on July 22.

John Korenic, an aviation consultant and an adjunct professor at the University of British Columbia's Sauder School of Business, told Vancouver Is Awesome that mergers generally result in less competition but they also open the door for other companies to offer new products.

Flair Airlines, Canada Jetlines, and Lynx Airlines currently offer low-cost flightoptions in Canada. Right now, only WestJet's budget brand, Swoop, offers vacation packages called "Getaways."

Swoop's flight and accommodation packages, powered by Expedia, generally offer a wider variety of economical options compared toWestJet's vacation product,WestJet Vacations, Korenic explained.

In addition to WestJet Vacations, Swoop Getaways, and SunwingVacations, Canadians can currently browse holiday packages with Air Canada Vacations and Air Transat.

But the lion's shareof Sunwing's customersuses the airline's vacation product, noted Korenic, who added that the airline is largely seasonal as a result. Sunwing has been supplementingthis demand by leasing aircraft from Europe during its busy season in the winter. If the merger moves forward, WestJetcould dedicateotherwise seasonal aircraft to operate year-round in Canada.

"They both operate the Boeing 737 next generation and also the 737 Max aircraft. If and when they merge, it would be fairly streamlined in terms of having similar fleets."

As a rule, mergers tend to reduce competition andthis generally drives up prices,said Korenic.

"But at the same time, it creates opportunities for new up-start airlines to come into the market."

Sunwing has about 40 aircraft and WestJet has roughly 180, so there's a considerable difference in size between the two companies, Korenic added. In other words, the merger will have an effect on the industry but it wouldn't be as significant as one between airlines with comparable fleet sizes.

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Flights from Vancouver: WestJet announces Sunwing merger - Vancouver Is Awesome

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