Most government functions have either screeched to a halt or been re-directed to address pandemic-related concerns, but the Canadian Competition Bureau is still ticking along. Today it released its findings in a review of Air Canada’s proposed acquisition of Transat.
The Bureau has concluded that the deal will likely result in a substantial lessening or prevention of competition in the sale of air travel and vacation packages to Canadians.
Although the full report is in the hands of the federal Minister of Transportation, whose department has until May 2 to complete a public interest assessment for the Minister and federal cabinet to consider, the news release set out some of the primary issues that the Competition Bureau identified with the deal.
Air Canada and Transat are 2 of the 4 largest airlines in Canada, and both offer integrated vacation operators that sell vacation packages. The airlines have 49 overlapping routes between Canada and Europe, with an addition 34 overlapping routes between Canada and sun vacation destinations in Florida, Mexico, Central America, and the Caribbean. On 22 of these routes, Air Canada and Transat are the only Canadian airlines offering non-stop service.
The elimination of competition between the airlines, in the estimation of the Competition Bureau, is likely to lead to increased prices, fewer choices, and decreases in service across the overlapping routes — all things Ben mentioned when news of the potential deal first became public.
The Bureau notes that its analysis is based on data collected in advance of the pandemic, so it’s difficult to say whether it will hold up in our new reality. Depending on how the next few weeks/months go, Air Canada may not be terribly upset if the government ultimately blocks the deal.
In the interim, Canadians can take a little comfort in the fact that at least some government bodies (I’m looking at you, CTA) appear to have an interest in protecting them from predatory airlines.