WestJet to Acquire Sunwing, With Conditions

Summary#

This Order in Council approves the takeover of Sunwing Airlines Inc. by WestJet Airlines Ltd., under the Canada Transportation Act, on March 9, 2023. The approval is conditional: WestJet must meet a set of specific service, employment, safety, reporting and other commitments before and after the deal closes.

What it does#

• Requires WestJet Airlines Ltd. to keep seasonal seat capacity on certain city pairs at least 90% of 2022 levels for each season from the 2023/2024 Winter Season through the 2026 Summer Season, with limited exceptions.
• Orders WestJet to phase out Sunwing’s seasonal leasing of aircraft from non‑Canadian carriers and to use Canadian, unionized pilots and cabin crew on Sunwing Vacations flights until the fifth anniversary of Closing, with the phase‑out to be started no later than the Summer Season of 2026.
• Gives Canadian suppliers a full and fair chance to bid on seasonal aircraft leases for three years after Closing.
• Requires WestJet to offer Sunwing‑branded holiday packages from five new Canadian origins within two years, each for at least 52 days per year and for two years.
• Requires repayment of Sunwing’s federal LEEFF loans on Closing (total federal support reported as $316.9 million).
• Forces WestJet to keep key offices and grow jobs in the Vacations business:
  • maintain its Calgary group head office for five years;
  • keep the Vacations business head office in the Greater Toronto Area for five years and a Vacations office in Greater Montreal for five years;
  • increase the Toronto Vacations office headcount by 20% above specified 2022 baselines (baselines: 250, 270, and 43) within three years and keep that increase for three years.
• Keeps the Sunwing Brand in use for at least five years.
• Requires safety alignment and training: align safety management systems within one year and provide matching training for Sunwing operational staff for three years.
• Requires at least $1,000,000 in additional technology projects within three years to improve passenger communications and staff capacity.
• Asks WestJet to use commercially reasonable efforts for increased regional connectivity and better baggage handling for three years.
• Establishes reporting and monitoring:
  • semi‑annual compliance reports to the Minister and the Commissioner for five years beginning 2023;
  • annual packaged‑vacation price data and financial data for three years beginning 2023;
  • an Implementation and Monitoring Agreement and an independent Monitor before Closing to oversee compliance.
• Notes possible enforcement: the Order references penalties in the Act, including fines up to $10,000,000 and imprisonment up to five years, and court powers such as divestiture if terms are broken.

Who's affected#

• Leisure travellers who fly from Canada to sun destinations (Florida, the Caribbean, Mexico and Central America), especially people in the Western Canadian origins named in the order (examples include Victoria, Vancouver, Kelowna, Calgary, Regina, Saskatoon, Winnipeg, Ottawa).
• WestJet Airlines Ltd. and Sunwing Airlines Inc., plus their staff and unions (pilots, cabin crew, and office workers).
• Canadian aircraft suppliers and smaller carriers that could supply seasonal aircraft.
• Other airlines and travel companies that compete on popular vacation routes.
• Airports and communities that rely on southern leisure routes.
• The federal government (because of loan repayment and ongoing price monitoring).
• Travel agents and suppliers who work with Sunwing/WestJet vacation packages.

Why it matters#

• The deal is meant to keep Sunwing operating and to protect jobs and routes that were at risk because Sunwing had large pandemic‑era debt. It forces repayment of $316.9 million in federal support and ties several public‑interest commitments to the sale.
• It preserves a familiar low‑cost vacation brand for at least five years and requires minimum service on some routes, which could help maintain connectivity for certain communities.
• At the same time, the federal Competition Commissioner warned the merger could reduce rivalry on many routes and push prices up. The approval balances those competition concerns against the risk that Sunwing might fail without a sale.
• The government will monitor prices and performance for several years, so Canadians may see government reports on packaged‑vacation pricing and compliance with the conditions.