Yahoo Finance Expect higher prices as WestJet integrates Sunwing Airlines: experts
WestJet Airlines’ decision to wind down Sunwing Airlines and integrate the carrier into its mainline business will result in less competition and higher prices for Canadian air travellers, according to industry experts.
“There’s going to be consolidation, there’s going to be a reduction in air service as a result of this consolidation, and there is going to be an increase in price,” John Gradek, a faculty lecturer of aviation management at McGill University, said in an interview with Yahoo Finance Canada.
“There is no doubt in my mind.”
The airline unveiled its plan to shut down Sunwing Airlines and fold it into WestJet in an internal memo to employees that was obtained by The Canadian Press on the weekend. WestJet confirmed in a statement on Monday that it plans to integrate Sunwing Airlines into its main operations, but that the process will not start before 2024.
The announcement comes shortly after WestJet said it would shut down its low-cost carrier Swoop.
“We are confident that the future integration of Sunwing Airlines into the WestJet Group, following that of our ultra-low-cost carrier Swoop will significantly enhance our ability to provide affordability and choice to our guests," Alexis von Hoensbroech, WestJet’s chief executive officer, said in a statement.
"As the strongest airline in Western Canada and the biggest vacation provider across the entire country, the integration of Swoop and eventually Sunwing Airlines into the WestJet Group will enhance affordability and serve to increase choice for Canadians for their air travel and vacation plans."
WestJet completed its acquisition of Sunwing Vacations and Sunwing Airlines in May after the federal government approved the deal, despite concerns raised by the Competition Bureau. In a report delivered to Transport Minister Omar Alghabra in Oct. 2022, the Competition Bureau said WestJet’s acquisition of Sunwing “would likely result in increased prices, less choice and decreases in service for Canadians.”
Gradek agrees, and says he expects that prices will likely go up for vacation packages as WestJet integrates Sunwing’s operations into its own.
“You’re going to see Sunwing expand its presence in the marketplace, because they have a lot more airplanes to play with,” Gradek said.
“So you’ll have more choices, but I don’t think they’ll be at the rock bottom prices that people may have previously seen with Sunwing.”
Aviation consultant Rick Erickson said Air Transat and Air Canada will ensure a healthy mix of competition for sun destinations, but that travellers in smaller markets ranging from Saskatoon to St. John's, N.L., may well have to shell out more.
Fares have already been on the rise in an environment marked by pent-up demand. According to aviation data firm Cirium, out of more than 180 sun destinations – mostly in Mexico, California, Arizona, Florida, and the Caribbean – prices went up in 87 per cent of cases. For example, fares from Canada to Key West, Fla. increased 23 per cent.
Air passenger rights advocate Gábor Lukács said the Sunwing acquisition should not have been approved by the federal government to begin with.
“It doesn’t really matter what WestJet does now with the branding of Sunwing. That’s really just about the paint you put on the plane,” Lukács said in an interview.
“It is still one controlling company making the business decisions... The impact of this is higher prices, worse service for consumers and ultimately less competition.”
With files from the Canadian Press
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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