WestJet (WS, Calgary) has welcomed Ottawa's approval of its proposed acquisition of Sun Wing Vacations and Sunwing Airlines (WG, Toronto Pearson), albeit with strict terms and conditions.

"The issuance of the order is an important milestone in the process towards closing the transaction," WestJet Group said in a statement. "We are pleased that the regulatory review of the transaction is now complete," commented Angela Avery, WestJet Group executive vice-president.

The statement followed a March 10 announcement by Canadian Transport Minister Omar Alghabra that the proposed merger was deemed in the public interest and would help maintain the stability of the sector "as Sunwing will continue to provide more affordable vacation packages to Canadians while being financially supported by WestJet".

He said the decision to approve the merger with the Canadian leisure specialist was not taken lightly, "especially considering delays and bottlenecks experienced by travellers last summer, as well as the customer service and communications challenges by Sunwing during the recent holiday season". In determining whether the proposed purchase was in the public interest, the government considered a broad range of factors, such as levels of service, social and economic implications, the financial health of the air transportation sector, and competition.

"After considering the pros and cons, we have made the decision that will allow Sunwing to continue to provide affordable vacation packages to Canadians" and create more jobs, he said. "Strict terms and conditions will accompany the agreement to ensure the public interest, including about competition, connectivity, and baggage handling."

WestJet will have to comply with the following conditions:

  • extend Sunwing vacation packages to five new Canadian cities;
  • maintain capacity on routes most affected by the merger;
  • increase regional connectivity;
  • improve baggage handling;
  • maintain a vacations business head office in the Toronto area and a regional office in the Montreal area for a minimum of five years;
  • increase net employment by 20% over three years in the Toronto office;
  • ensure better passenger experiences by investing in IT technology solutions to improve Sunwing's communications;
  • supply airfare data on vacation packages for the monitoring of post-acquisition price trends; and
  • gradually end Sunwing's seasonal leasing practice to protect Canadian jobs.

Ottawa's decision followed an assessment of the proposed deal by Transport Canada, which incorporated the findings of the Commissioner of Competition and consultations with Canadians, consumer protection groups, unions and the industry, the minister said.

In an emailed statement, Sunwing told CBC News: "We look forward to closing the transaction in the weeks ahead and officially joining the WestJet Group".

The airline blamed logistical problems and a pilot shortage for cancelled operations over the Christmas holidays at Saskatoon and Regina airports.