The Canadian Competition Bureau issued a report on March 27 warning that the proposed sale of Transat A.T. Inc., the parent firm of Air Transat (TS, Montréal Trudeau), to Air Canada (AC, Montréal Trudeau) would probably result in a substantial reduction or prevention of competition in the sale of air travel and holiday packages.
Eliminating the rivalry between Air Canada and Air Transat in the CAD720 million (USD508 million) deal “would result in increased prices, less choice, decreases in service, and a significant reduction in travel by Canadians on a variety of routes where their existing networks overlap,” the regulator said.
The report, delivered to the Minister of Transport, includes analysis on 83 routes, 49 of which are overlapping routes between Canada and Europe and the remaining 34 are overlapping routes between Canada and “sun destinations” in Florida, Mexico, Central America, and the Caribbean.
The transaction also represents a merger of the only two carriers offering non-stop service on 22 of these routes, it added.
The assessment is based on forward-looking analysis using data and information collected before the Covid-19 pandemic, the regulator said, recognising that the impact of these events on the Canadian airline industry will be significant in the near term.
“The ultimate impact of these events may be relevant to the Bureau’s views on the proposed transaction but it is impossible to know the full extent and duration of any impact at this time,” the bureau said.
Industry regulator Transport Canada now has until May 2 to complete its own public interest assessment and provide it to the minister, and a final decision on the proposed transaction will be made thereafter by the Canadian government.
Transat president and CEO Jean-Marc Eustache commented in a statement that the report must be seen "with a bit of perspective".
The role of the competition commissioner "is limited to studying impacts on competition in the marketplace; in other words, identifying potential difficulties without necessarily contemplating what solutions or mitigation measures might be implemented, and without taking the public interest more broadly into account," he explained.
"Transport Canada's assessment will provide a more comprehensive overview of the nuts and bolts of the transaction and of all the benefits for the Canadian public and economy."
