While many critics worry that WestJet's integration of both its budget airline Swoop, as well as newly-acquired Sunwing Airlines, into its mainline will reduce consumer choice and give it free rein to boost fares, other industry observers say the evolving aviation landscape might actually give travellers an airfare honeymoon - even if it's temporary.
As Open Jaw has reported, John Gradek, a professor with McGill University's aviation management program, told CBC News flatly that the ultimate outcome of two budget airlines being folded into WestJet's mainline is simple:
“Consumers will have less choice, and consumers will pay more.”
WestJet has made efforts to assuage those widely-expressed concerns about consolidation, including with a release 20JUN specifically addressing affordability of air travel. The Group's CEO reiterated his previous statements that WestJet's mainline will provide a full range of airfares from lower cost to premium, by "combining the best of every airline across the WestJet Group," including Sunwing Airlines and Swoop, into one product offering.
"We are confident that the future integration of Sunwing Airlines into the WestJet Group, following that of our ultra-low-cost carrier Swoop will significantly enhance our ability to provide affordability and choice to our guests," said Alexis von Hoensbroech.
On the tour operation side, Sunwing Vacations will maintain its own brand and operations while leveraging the WestJet air network. Along with WestJet Vacations, the company says that will "significantly expand vacation offerings to even more communities across its extensive network as well as offering affordable vacation packages from communities in Canada on a year-round basis, which were previously seasonal."
One thing WestJet doesn't mention in its 20JUN statement about access to affordable travel, however, is the likely long-term effect its purchase of Sunwing is likely to have on the air industry landscape.
As Open Jaw has reported, Gradek believes WestJet, bolstered by current strong demand and fares, is likely to go after smaller discount airlines like Flair and Lynx to corner their market share. The easiest way to force a sale is to start a price war that smaller airlines can't win.
“I’d expect we’ll have some pretty intense price competition come this fall and winter among Flair, Lynx and WestJet,” Gradek told The Toronto Star.
So consumers would enjoy a brief period of discounted airfares while WestJet applies pressure on smaller rivals. Then, once they fold or are acquired by WestJet, "Guess what happens to your prices then?” said Gradek. “They go back up to where they were, if not higher.”
But not everyone agrees consumers will get even a short break.
An economist at York University told The Star that while there may be some increased competition in the short term, deep discounts were unlikely, due to high costs, especially of fuel (and increasingly, of richer labour agreements), combined with continued high demand that will keep upward pressure on airfares.
