Friday, 12 February 2021

Air Canada gets approval to take over Transat group despite dire warnings from Competition Bureau

Air Canada gets the green light for Transat takeover.....

In a shock move, we're told at the direct request of Justin Trudeau, the government of Canada has given its approval for Air Canada to take over the Transat group despite dire warnings from the competitions bureau.

The Competition Bureau has warned the purchase of Transat by Air Canada would be bad for consumers "Eliminating the rivalry between these airlines 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."

Yet, on Thursday evening the government approved the purchase without any significant remedies, conditions, or clauses, giving many cause for concern, including the boss of rival airline WestJet.

WestJet President and CEO Ed Sims said:  "This decision shows blatant disregard for all Canadians who believe in healthy competition -  When Canadians look to explore the world and reunite with family and friends once again, they will face fewer choices and higher fares."

Sims continued: "It is hard to imagine a deal as anti-competitive in any industry where the number one player buys number three without meaningful remedies," continued Mr. Sims. "This is a serious setback to Canada's economy. The Competition Bureau themselves described such cosmetic remedies as inadequate. Canadians should be profoundly disappointed."

The deal is valued at around $180 million and as part of the conditions fr the takeover, the government is requiring Air Canada keeps the Transat’s brand, maintains its headquarters in Quebec for a limited time as well as ensure that local companies have priority on maintenance contracts. Air Canada also had to commit to keeping its current 1,500 employees, which they have done by laying off a similar number of its own staff in recent weeks.  

Whilst the deal has approval from the Canadian government there could still be another hurdle for Air Canada in the shape of the European Commission, which still needs to give its approval to the takeover if the new airline wants to continue transatlantic flights. 

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