AirTransat-Air Canada buyout: competition authority unhappy

The Air Canada buyout of AirTransat has run into trouble, with the Canadian Government expressing severe concerns over the lack of competition it will bring to the country.

Saying that it would dramatically reduce competition on a substantial number of international routes and potentially damage the choice customers have, resulting in increased prices, less choice, reductions in service and a reduction in travel over certain duplicated routes.

The Competition Bureau says that after an examination of the two airlines’ routes it determined that the merger would apply to 83 overlapping routes: 49 between Canada and Europe and 34 between Canada and traditional vacation destinations in Florida, Mexico, Central America and the Caribbean. The transaction would represent a merger of the only two carriers offering non-stop service on 22 of these routes.

WestJet said it too wasn’t happy about the merger. The Government will get a recommendation on May 2nd from the competition bureau, which would seem to be leaning towards it being declined.

The fact is things have changed dramatically since June last year when the $710m deal was struck. Air Canada could well find it either hasn’t got the cash or even if it does, that it no longer wants to spend it. Air Travel is not going to go back to how it was very quickly and Air Transat’s value will have slumped.