WestJet says swallowing Sunwing, Swoop is a win for travelers – but not everyone has high hopes
WestJet’s acquisition and consolidation of low-cost carriers Swoop and Sunwing into its flagship carrier has left some vacationers and travel experts concerned about higher prices to come. But the CEO of the Calgary-based airline says the move is a win for everyone.
On Sunday, WestJet Airlines Ltd. announced that it plans to fold the recently acquired Sunwing Airlines as a standalone entity and merge it with the airline of the same name. That move came just days after it announced similar plans for Swoop, the low-cost carrier it launched itself in 2017. The federal government approved the Sunwing acquisition in March.
The merger means there are two fewer low-cost carriers serving travelers in Canada, raising concerns from critics that there will be less competition in the industry and higher prices.
For travelers like Amber Murray, both moves sound ominous. She and her family often fly on Swoop for vacations instead of the regular airlines because the hub in Hamilton is about 50 miles from their home in Beachville, Ontario. — closer than Pearson International Airport in Toronto — but also because the prices are much more affordable for her family’s budget.
Over the years, Murray said, she’s managed to secure flights for as little as $99 per person to vacation destinations like Las Vegas. She planned to use the airline again when the family flies to Mexico this winter, but she said WestJet’s prices run into the thousands of dollars — not the roughly $900 she usually spends on her family of four.
“We won’t be able to travel as a family of four,” Murray told CBC News in an interview. “I’m not going to be able to show our kids the world.”
While she mostly flew Swoop, not Sunwing, Murray said the news of WestJet consolidating several airlines known for their low fares under one full-service banner isn’t an encouraging development.
“Who knows if we can afford to go away any longer,” she said. “I am very concerned.”
Less competition, higher prices: analyst
Anshul Singh, founder of the travel and loyalty program website Points, Miles and Bling, said he thinks travelers like Murray have cause for concern.
“It’s not good news for Canadian consumers in general, it never has been,” he said in an interview. “Any time we see reduced competition, we should really expect prices to increase over time.”
Singh said WestJet could herald the moves as a victory for all and told regulators what they needed to hear to sign the pact. But ultimately, he said, the moves to land Swoop and Sunwing are designed to maximize their profitability.
WestJet plans to shut down Sunwing Airlines after acquiring the no-frills airline, leaving Canadians with one less cheap travel option. Some industry experts warn that the decision will only drive up air fares.
While not exactly luxurious, low-cost carriers tend to cut prices from major airlines in destinations where there are multiple options, and they influence the market indirectly by offering travelers alternative destinations within the same country.
Swoop, in particular, made large profits selling domestic flights between smaller Canadian cities, such as Abbotsford, BC, and Hamilton – unlike Toronto and Vancouver.
According to information from the Federal Competition Bureau, of all sun destinations Canadians fly to, more than a third were served by WestJet or Sunwing. For those departing from Western Canada, the ratio jumps to nearly three-quarters.
Singh said losing rival airlines will not force WestJet to cut prices or launch new routes more than necessary. “I don’t see them turning around and suddenly offering rates under $100 to anywhere in Canada,” he said.
‘Consumers are reasonably smart’
For its part, WestJet says consumers should indeed expect the same type of low-cost seats they saw before, except they will now be sitting on a WestJet-branded plane.
In an interview with CBC News, Alexis von Hoensbroech, CEO of WestJet, said the move to merge the other airlines’ planes into mainline service will lead to more options for consumers, not fewer.
“Instead of selling super-low fares on 16 planes, we’re going to sell super-low fares on 180 planes,” he said, reiterating the previous commitment from the company that a portion of the seats on each individual flight will be reserved for discounted fares – even though most of the tickets on any given flight are likely to be more expensive full-service fares.
“We give choice for every thing on every plane, and I think that actually makes more sense because the consumer ultimately wants choice,” von Hoensbroech said. “Ultimately, the market determines the prices, but our ambition has always been and remains our ambition to offer very competitive rates.”
Calgary-based aviation consultant Rick Erickson said he thinks fears of a lack of competition are overblown, as rival airlines will provide a healthy mix of competition.
“I don’t think much will change, mainly because consumers are pretty smart, the Competition Bureau is watching and there are other players in the market,” he said.
“Two big ones, Air Canada and Air Transat, are going to make sure WestJet doesn’t get glory wins because of this.”
Ultimately, however, Amber Murray said she’s not convinced because, as she puts it, “bigger companies always promise something and never deliver — they’re just there to monopolize the market and buy up everything they can.”
“I’m not buying it at all. I’ve yet to see a decent sale from WestJet,” she said. “We were able to score tickets to go to BC for $48 from Swoop. There’s no comparison.”
