WestJet buyout, Air Transat-Air Canada talks — how they could impact prices and travel
Canada’s aviation industry is potentially seeing some major shakeups.
On Monday, it was revealed that Toronto-based Onex Corp. will buy WestJet Airlines Ltd.
Investment company Onex’s $5 billion buyout of WestJet is set to be completed — subject to a number of conditions, including court, regulatory and shareholder approvals — in the latter part of 2019 or early 2020.
WATCH: Calgary-based Westjet to be purchased by Onex Corporation in multi-billion dollar deal.
Talks between Air Canada and Transat AT Inc. haven’t progressed as far. The Montreal-based low-cost airline company says it has agreed to a 30-day period of exclusive negotiations with Air Canada regarding a possible deal at a price of $13 per share.
But what does all this news mean for Canadian consumers? Here’s a look at what will stay the same — and what could change.
Prices may go up
Ross Aimer, a pilot and CEO of Aero Consulting Experts, explained to Global News that consumers can expect to see ticket prices rising if these deals are finalized.
“Air Transat owns about 20 to 25 per cent of the Canada to Europe market, so that’s a big chunk,” Aimer said. “And Air Canada is doing the same thing, so if they merged with Air Canada, I would imagine a price hike.”
Aimer explained that’s because mergers mean less competition, and less competition typically means higher prices. In this case, he said he doesn’t imagine a “huge amount of increase, but roughly about 10 to 15 per cent.”
The WestJet deal would have a similar impact, he said.
“This is very normal in U.S. and Canada, bigger carriers gobble up the weaker carriers and vice versa,” he said, noting it typically means both job losses and higher prices.
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What an Air Transat sale could mean
McGill University professor Karl Moore explained a combination of the two companies would help grow Air Canada Vacations, which competes with Transat, WestJet and others in the leisure travel market.
Transat offers vacation packages, hotel stays and air travel under the Transat and Air Transat brands, with a primary focus on the transatlantic market during the summer and sun destinations through the winter.
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Air Canada chief executive Calin Rovinescu said a combination with Transat represents a great opportunity for both companies.
“The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel,” Rovinescu said in a statement.
What the WestJet buyout could mean
While it’s not clear yet what vision Onex has for WestJet, John Korenic, an adjunct professor at the University of British Columbia’s Sauder School of Business, said the takeover mean increased options for travellers.
He told Global News it could give Canadians more business class choices and more international flights. Korenic said full-fledged business class offering is “the big advantage” Air Canada currently has over WestJet.
“I would anticipate that there would be potentially a real focus of Onex to head more in that direction,” he explained.
Another area where WestJet has room to catch up with Air Canada is in adding international destinations, particularly in Asia, Korenic added.
The WestJet rewards program will continue on “business as usual,” WestJet spokesperson, Lauren Stewart told Global News.
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“WestJet will continue to maintain our frequent flyer program and credit card partnership,” she said.
WestJet and its low-cost carrier Swoop also remains in place, she said, adding that the buyout will not impact customers who have bought tickets or want to book future flights.
— With files from Global News reporters Erica Alini, Katie Dangerfield and The Canadian Press
© 2019 Global News, a division of Corus Entertainment Inc.