WestJet acquisition of Sunwing approved

Summary#

The Governor in Council approved the acquisition of Sunwing Airlines by WestJet Airlines under the Canada Transportation Act on March 9, 2023 (published in the Canada Gazette on April 8, 2023). The approval is conditional: WestJet must follow a set of detailed Terms and Conditions (remedies and commitments) before and after the deal closes.

What it does#

• Keeps certain winter and summer flights running. WestJet must provide seasonal seat capacity on specified city-pairs at levels close to what was flown in 2022 (with rules covering the 2023/2024 winter season through the 2026 summer season).
• Requires WestJet to repay Sunwing’s federal pandemic-related loans on closing. Sunwing received $316.9 million in federal financing (including $216.5 million and $100.4 million facilities under the LEEFF program).
• Phases out Sunwing’s seasonal practice of leasing aircraft and crew from non‑Canadian carriers, and (subject to law and collective agreements) shifts work toward Canadian, unionized pilots and cabin crew for Sunwing Vacations flights for up to five years.
• Gives Canadian suppliers a chance to bid on seasonal aircraft leases for at least three years.
• Expands Sunwing-branded vacation packages from five new Canadian origins within two years, offered on at least 52 days per year for at least two years.
• Keeps the Sunwing Vacations brand in use for at least five years, and preserves specific head offices and offices (WestJet in Calgary area; Vacations head office in Greater Toronto; a Vacations office in Greater Montreal) for set periods.
• Requires safety-system alignment and training within one year, and at least $1,000,000 in technology projects within three years to improve passenger communications and staff capabilities.
• Imposes regular reporting and monitoring: six‑monthly compliance reports for five years, and price and financial data for three years (with summaries the government may publish).
• Sets up an Implementation and Monitoring Agreement and an independent monitor to check compliance. The order notes there are enforcement measures under the Act, including possible court actions and fines.

Who's affected#

• Travellers who buy package vacations to sun destinations (especially from Western Canada). The changes aim to keep routes and package options available.
• Customers on the specific “Relevant City Pairs” listed in the order (mostly routes from Western and some central Canadian cities to sun destinations).
• Employees of Sunwing and WestJet, particularly pilots, cabin crew, and staff in the Vacations business (the order includes headcount and job-location commitments).
• Competing airlines, airports, travel agencies and tour operators — they may face a larger WestJet but also guaranteed minimum service on some routes.
• Canadian aircraft suppliers and leasing firms who may get priority to bid for seasonal leases for three years.
• Canadian taxpayers and the federal government, because the order ensures repayment of the federal loans to Sunwing totaling $316.9 million.
• Unions representing airline workers, since rules touch on employment, collective-bargaining exceptions, and use of Canadian crews.

Why it matters#

• The government weighed the risk that Sunwing, which suffered heavy pandemic losses, might fail and disappear. Approving the deal aims to keep affordable vacation-package options and jobs in the market while stabilizing the airline sector.
• The conditions try to protect connectivity for smaller communities, at least in the short term, and force some consumer-facing improvements (better communications, baggage handling, safety alignment).
• The order balances two real concerns: possible higher prices and less competition on some routes versus avoiding the immediate loss of Sunwing’s services and the need to repay federal loans.
• For travellers, the immediate effects may be continuity of popular sun‑destination routes and more predictable service. For competitors and regulators, the monitoring and reporting requirements create tools to watch fares and service after the merger.