Canadian Consolidation: WestJet Acquires Sunwing

Canadian Consolidation: WestJet Acquires Sunwing

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There’s some consolidation coming to the Canadian airline industry, as a definitive agreement has been reached under which WestJet Group will acquire Sunwing Vacations and Sunwing Airlines.

Basics of WestJet’s acquisition of Sunwing

Canada’s second largest airline, WestJet, will be acquiring Canadian leisure operator Sunwing, in a deal that’s expected to close in late 2022. For context on the two brands:

  • WestJet operates a fleet of over 100 aircraft, including Boeing 787s, Boeing 737s, De Havilland Dash 8s, and Saab 340s; the airline has become increasingly premium in recent years, and isn’t a low cost carrier anymore
  • Sunwing is a Canadian ultra low cost carrier with a fleet of over 25 Boeing 737s, which operates primarily to warm weather leisure destinations; but the company isn’t just an airline, but is also big in the package holiday space (for example, some of the all-inclusive properties that joined Marriott Autograph Collection belong to Sunwing Travel Group)

Once the deal closes, it’s expected that a new tour operating business unit will be created under the WestJet Group, which will include both Sunwing Vacations and WestJet Vacations. This will be led by Sunwing CEO Stephen Hunter.

One interesting angle is that historically Sunwing has seasonally increased capacity by leasing aircraft on a short-term basis, which is costly. For example, the airline has been wet leasing TUI Boeing 737-800s. To be more efficient, WestJet will instead fly these planes seasonally within Canada, given that the airline operates in more business markets that aren’t as susceptible to seasonal demand.

Here’s how WestJet CEO Alexis Von Hoensbroech, describes this acquisition:

“This is an exciting moment for WestJet, Sunwing and Canada’s travel industry. We are bringing together two highly complementary businesses with powerhouse brands to strengthen our successful leisure business and deliver greater value to our guests.

This combination brings together Canada’s two original low-cost carriers and positions us to accelerate growth in value-oriented travel, already the fastest growing segment of the airline market. It creates new opportunities for our people, our operational partners and supports the recovery from a global pandemic that has been particularly challenging for the Canadian travel and tourism industry including local airports and businesses we work closely with.”

WestJet’s Boeing 787-9 business class

My take on WestJet’s acquisition of Sunwing

Canadian aviation is complicated — you have a large country with a small population and highly seasonal demand. That can make it tough for any airline to succeed, whether leisure or business oriented. Despite its challenges, Canadian aviation has seen a huge amount of growth and innovation in recent years, in particular among ultra low cost carriers.

My first thought when I heard about this acquisition was how in June 2019, Air Canada announced plans to acquire Air Transat. That ended up being called off in April 2021, due to issues with regulatory approval. In some ways that felt similar to this — a major Canadian airline was looking to acquire a (relatively) small leisure-oriented airline.

With that in mind, a few thoughts here:

  • I’m curious to see if Sunwing fully maintains its own branding, or somehow gets integrated into WestJet’s brand
  • WestJet already has an ultra low cost carrier, Swoop, so I’m curious if Sunwing will exist alongside Swoop, or what
  • Sunwing has a robust vacation packages division, so it does seem like there’s major upside here for WestJet to grow in that space
WestJet is acquiring Sunwing

Bottom line

Canada’s second largest airline, WestJet, will be acquiring leisure airline Sunwing. Sunwing’s strength is with vacation packages, so it seems to like the two businesses are highly complementary. As this merger progresses, I’m looking forward to learning more details about how the companies will be integrated.

What do you make of WestJet acquiring Sunwing?

Conversations (13)
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  1. Tommy Guest

    Cut up my Westjet credit card years ago and sent it to their CEO. Never heard a word back.
    I could not believe the constant poor uncaring service !
    Good riddance to what I hoped would be a game changer. Now I am back to Air Canada.
    So far, so good !

  2. Azamaraal Diamond

    With AS not flying into YLW we flew Westjet to PVR last November. Well over double the price but at least we didn't have three countries to contend with. Flew premium which was really a waste of money but better than AS "first".

    With the reduced schedule of AS into YLW overnight in SEA both ways is a must but the savings are still there especially with a mattress run included.

    Sunwing flew directly to...

    With AS not flying into YLW we flew Westjet to PVR last November. Well over double the price but at least we didn't have three countries to contend with. Flew premium which was really a waste of money but better than AS "first".

    With the reduced schedule of AS into YLW overnight in SEA both ways is a must but the savings are still there especially with a mattress run included.

    Sunwing flew directly to PVR in the past so this might be a better option. We'll see but probably have to hold nose while airborne.

  3. Santi Guest

    West jet - worst ever! Even wors then a Ryanair.
    Bunch of assholes . Never will fly again.

  4. Bob Guest

    Sunwing is not and never was an "ultra low cost" carrier. On board services, customer service is better than the national full-price embarrassment that is Air Canada.

    Its a packaged vacation carrier

    1. DenB Diamond

      Compare the "full price" on AC with the air-only price on Sunwing for the same day of travel. Compare the pax experience of a traveller who has 25k status on AC: lounges, checkin, seats, eUps. AC is awful in their own unique way and I bristle when I have to fly them. But it's hard to take seriously any carrier whose fleet utilization is so high that if a plane goes mechanical one is stranded...

      Compare the "full price" on AC with the air-only price on Sunwing for the same day of travel. Compare the pax experience of a traveller who has 25k status on AC: lounges, checkin, seats, eUps. AC is awful in their own unique way and I bristle when I have to fly them. But it's hard to take seriously any carrier whose fleet utilization is so high that if a plane goes mechanical one is stranded for days. I agree AC is an embarrassment. But that doesn't make Sunwing or Westjet non-awful.

  5. Winterpegger Guest

    I suspect this will be bad news for smaller markets like Winnipeg where Sunwing offered a great variety of direct flight vacation packages to sunspots in the winter. “CalgaryJet” offers some direct flights but nowhere near as many, and although Calgary is a nice city, I’m not convinced that spending a night in the airport while waiting for a connecting flight the next morning is the best way to see Calgary and definitely not how...

    I suspect this will be bad news for smaller markets like Winnipeg where Sunwing offered a great variety of direct flight vacation packages to sunspots in the winter. “CalgaryJet” offers some direct flights but nowhere near as many, and although Calgary is a nice city, I’m not convinced that spending a night in the airport while waiting for a connecting flight the next morning is the best way to see Calgary and definitely not how I want to start a winter vacation. Much like the telecommunications industry in Canada, larger players are devouring smaller players which results in less competition, fewer options, and higher prices. These things never end well for the consumer.

  6. Janice Mather Guest

    I am most interested to know what will happen to my close to $6000 credit with Sunwing which I have held with them since November 2019 due to a cancellation of a package with them where I had purchased their “worry free cancellation” insurance.

    1. Eskimo Guest

      Is the defendant also the underwriter?
      Now that's conflict of interests.

  7. bruh Guest

    man, this sucks for us Canadians now. with less competition, we gotta pay higher prices now grr

  8. DenB Diamond

    It's Canadian anti-competition consolidation. The majority of Canadian travellers pay cash, fly on LCCs or ULCCs, as part of a package to a sun destination or to Europe in summer. They don't "choose" an airline, they buy a vacation package on price on sunwing, iTravel2000, WestjetVacations, exit.ca or similar websites. Westjet's business model depends on success in this segment. Unlike on the US3, Westjet's "Business" travel sales depend on customers who don't mind that they...

    It's Canadian anti-competition consolidation. The majority of Canadian travellers pay cash, fly on LCCs or ULCCs, as part of a package to a sun destination or to Europe in summer. They don't "choose" an airline, they buy a vacation package on price on sunwing, iTravel2000, WestjetVacations, exit.ca or similar websites. Westjet's business model depends on success in this segment. Unlike on the US3, Westjet's "Business" travel sales depend on customers who don't mind that they get no useful points, don't mind that there's nothing to upgrade to, don't mind that the carrier's direct competitor offers all these advantages for the same price. So Westjet takes leisure sales very seriously and sunwing has been their biggest competitor at the low end. It's a smart move and it's interesting as a major move in the industry. I just encourage readers to avoid the temptation to think of Westjet as a proper airline like AA, Delta, BA, AC (whatever you think of them, and who doesn't?). Westjet is an LCC with lots of lipstick. No Business Class in nearly all of their flights, insulting loyalty program, no Alliance. For PointsMiles people, this deal is a nothingburger. For Canadians who take package vacations, the price will go up.

  9. Todd Guest

    "including everything from Boeing 737s to Boeing 787s"

    Man, there's a LOT that could possibly fall in between but the reality is they have a small range of aircraft in their fleet. Just say, "including Saab 340s, De Havilland Dash 8s, Boeing 737s and Boeing 787s". /s

    1. Ben Schlappig OMAAT

      @ Todd -- Fair point, thanks, will update the post to reflect that.

  10. Tim Dunn Diamond

    If WestJet is finally able to provide legitimate competition to Air Canada, from the most discounted seasonal leisure sun destinations to transoceanic longhaul business destinations, they will have done what no other airline has been able to do and sustain in Canada without being bought out by Air Canada.

    There are also indications that WestJet is not scheduling as many LGA-YYZ flights in the future as it has in the past which could indicate they...

    If WestJet is finally able to provide legitimate competition to Air Canada, from the most discounted seasonal leisure sun destinations to transoceanic longhaul business destinations, they will have done what no other airline has been able to do and sustain in Canada without being bought out by Air Canada.

    There are also indications that WestJet is not scheduling as many LGA-YYZ flights in the future as it has in the past which could indicate they are going to give another try to a joint venture with Delta.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

Tommy Guest

Cut up my Westjet credit card years ago and sent it to their CEO. Never heard a word back. I could not believe the constant poor uncaring service ! Good riddance to what I hoped would be a game changer. Now I am back to Air Canada. So far, so good !

0
Azamaraal Diamond

With AS not flying into YLW we flew Westjet to PVR last November. Well over double the price but at least we didn't have three countries to contend with. Flew premium which was really a waste of money but better than AS "first". With the reduced schedule of AS into YLW overnight in SEA both ways is a must but the savings are still there especially with a mattress run included. Sunwing flew directly to PVR in the past so this might be a better option. We'll see but probably have to hold nose while airborne.

0
Santi Guest

West jet - worst ever! Even wors then a Ryanair. Bunch of assholes . Never will fly again.

0
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