WestJet raises concerns about Air Canada-Air Transat merger

WestJet has urged the Canadian government to reject or modify the planned takeover by Air Canada of Montreal-based tour operator Transat and its airline Air Transat. The Globe and Mail reports that WestJet Chief Executive Officer Ed Sims on January 3, 2021, sent a letter to Transport Minister Marc Garneau asking him to reject the deal as it stands, or at least make major modifications. These include the two airlines giving up some airport slots and not letting Transat customers access Air Canada’s Aeroplan loyalty programme. “A fundamental element of Canada’s national transportation policy is to have at least two strong national airlines,” WestJet said. “WestJet’s ability to contribute to the Alberta economy and more broadly to the Canadian economy is imperilled by the proposed transaction.” Concerns about the implications of the Air Canada-Air Transat merger on free competition earlier saw a similar appeal to Garneau by Pierre Karl Péladeau, Chief Executive Officer of Canadian media and telecommunications giant Quebecor. Péladeau offered to pay 20% more than Air Canada for Air Transat in order to guarantee competition and fair pricing for Canadian travellers but was determined not to be a “superior proposal” under the terms of the arrangement with Air Canada. Ottawa is expected to rule on the CAD180 million (USD141.1 million) merger in the next couple of weeks. The European Union, which is worried the deal will reduce competition on flights between Canada and Europe, is expected to make a ruling by February 9. The proposed agreement is set to expire by February 15 unless both sides agree to an extension. In a statement to ch-aviation, Sims said: “For 25 years, WestJet has always stood for fair and transparent competition. For this reason, we do not believe the proposed transaction should proceed unless the government imposes critical mitigation measures. An approval without significant remedies would provide Air Canada with an unprecedented government-sanctioned monopoly to the unavoidable detriment of the travelling public through higher airfares and lower service”. If the merger goes ahead, the parties should give up airport slots, WestJet argued, singling out London Heathrow, Amsterdam Schiphol, and Toronto Pearson as hubs where Air Canada would gain even greater market share with the purchase of AirTransat. WestJet also wants Air Canada and Air Transat barred from using Pearson’s Terminal 3 to ensure “room for other airlines.”