After previous rumours about Sunwing Airlines being approached for potential acquisition by another Canadian carrier, WestJet has today announced plans to acquire Sunwing Vacations and Sunwing Airlines.
WestJet to Buy Sunwing
Following the global pandemic, WestJet’s acquisition of Sunwing represents a step of consolidation in the Canadian travel industry as it recovers from the impacts of the past two years.
WestJet, who also owns the ultra-low-cost carrier Swoop Airlines, intends to offer further competitive airfares and affordable vacation packages with its acquisition Sunwing, challenging Air Canada’s dominant position in the market.
Sunwing’s CEO will continue to lead a new tour-operating business unit under the WestJet Group, which will encompass both Sunwing Vacations and WestJet Vacations.
Currently, Sunwing Airlines offers flights from Canada to warm-weather destinations including the US, Mexico, the Caribbean, and Central America, as well as domestic and European flights during summer and holidays.
Now, with the acquisition by WestJet, Sunwing’s otherwise seasonal aircraft can be operated year-round in Canada, achieving greater operational efficiencies with WestJet’s existing fleet and network.
As a result of these synergies, Sunwing expects to be able to fully repay the emergency funding it received from the Canadian government in early 2021, its CEO relaying confidence of the new Sunwing vacation division’s success under WestJet Group’s strong balance sheets.
The deal is expected to finalize later this year, and is subject to receipt of regulatory approvals. It’s worth noting, however, that Air Canada had previously announced its intention to buy leisure-oriented airline Air Transat in June 2019, but eventually scrapped the deal due to difficulty with regulation approvals.
What Could This Mean for WestJet Rewards?
While we’ll have to wait to see the eventual implications from a travel cost and loyalty perspective, it’s worth thinking about what the Sunwing deal could signal about the future intentions of Canada’s second-largest airline.
If the deal goes through, we could potentially see WestJet Rewards and WestJet Dollars becoming redeemable on Sunwing flights and Sunwing Vacations in the future. This would open up some new destinations that WestJet Dollars can be used to book, as Sunwing has more flights to Sun destinations than any other leisure carrier.
Indeed, with recent changes since the airline’s acquisition by Onex in 2019, the WestJet Rewards program has already been moving in the direction of offering greater mass appeal with minimal weight behind the program, rather than necessarily high-value rewards.
The integration of Sunwing, a low-cost leisure airline, would only be a further step in that direction – one that’s diametrically opposite to the more full-service path that WestJet had appeared interested in following a few years ago with their acquisition of Boeing 787 Dreamliners, expanded route network, and elevated onboard and lounge offerings.
One thing’s for sure: the combined group of airlines would be well-positioned to compete on even more fronts against Air Canada, especially as leisure travel is still poised to take a greater share of the market in the coming years.
However, WestJet’s absorption of a competitor in the market represents a major consolidation at the industry level, so while WestJet and Sunwing may be keen to play up their mutual low-cost angle on the public relations front, only time will tell whether the competitive airfares and affordable vacation packages do in fact materialize.
With young upstarts like Flair Airlines and Lynx Air set to keep the bigger players on their toes, we’ll have to wait and see how things play out following the takeover’s completion in late 2022 to assess the overall impact on the Canadian airfare and loyalty landscape.
WestJet has announced plans to acquire Sunwing Airlines and Sunwing Vacations, representing a consolidation of Canada’s second- and fifth-largest airlines. The deal is expected to close in late 2022, subject to regulatory approvals.
With its acquisition of Sunwing, WestJet appears to be continuing down to the road of re-embracing its low-cost origins rather than moving upmarket towards a more premium identity.
Overall, this news is an example of the major shifts in aviation that were always an inevitable consequence of the global pandemic, with Canada’s industry is set to take on a much-transformed appearance as we move forward into a year in which travel is set to rebound significantly.