WestJet Moves Into a New Business Once Again With Sunwing Acquisition

Westjet

It may not have the blockbuster heft of a Frontier/Spirit merger, but last week WestJet announced it would acquire Sunwing north of the border. I was convinced that WestJet had already moved into too many different types of businesses, but apparently there’s room for one more.

Sunwing is a leisure specialist in the same vein as Air Transat, an airline that recently cozied up to WestJet with a codeshare after its acquisition by Air Canada fell through. At last check, Sunwing had 28 737s split between the 737-800 and the 737 MAX 8.

Sunwing is a very winter-heavy business. Here’s a look at its route map from this January via Cirium.

Sunwing January 2022 Route Map via Cirium

In case you’re wondering, this looks a WHOLE lot like the Air Transat map except Sunwing doesn’t have the long range airplanes to do Europe, and it has more of a presence in the West.

Air Transat January 2022 Route Map via Cirium

How does Sunwing fit into the WestJet network? Well, let’s take a stroll through WestJet’s history to answer that question.

Here’s the heart of the WestJet network — the flights operated by the 737 fleet — during January of this year. It’s largely focused in the West with some Toronto, but it’s also very north-south.

WestJet January 2022 Route Map for 737s via Cirium

Around 2005, WestJet looked around and realized something important… Canada is pretty small. It figured that its growth was limited, so instead of being happy with that, it opted to find different-sized airplanes to stretch its options.

First it looked small, and in 2013 it started up WestJet Encore to operate Q400 turboprops on smaller routes. Here’s this July’s route map:

WestJet Encore July 2022 Route Map via Cirium

You can see how it maintains that route through Thunder Bay to flow airplanes back and forth between the east and west. This wasn’t a terrible idea, but it certainly added complexity to an airline that used to be known for its simplicity. But it provided more feed and allowed WestJet to keep growing more than it otherwise expected would be possible.

But wait, there’s more. WestJet then decided that it could go further beyond North America if only it had bigger airplanes with more range. So in 2015 it took delivery of its first used 767s. Those had a more basic product befitting a lower-cost operator, but they were soon replaced by the 787 fleet which has a true, full-service international onboard product. Once again, WestJet added complexity but this again provided more feed opportunity for the rest of its network, adding competition for Air Canada.

WestJet July 2022 Route Map for 787s via Cirium

Those widebodies are useful during the summer, as you can see above in the July snapshot, but in the winter they end up doing things like Cancun since there isn’t all that much Transatlantic leisure demand.

At the other end of the spectrum, WestJet heard all these rumblings about low-cost operators starting up in Canada, so it figured it would build one itself. In 2018, Swoop came on the scene.

Swoop July 2022 Route Map via Cirium

Swoop basically flies on the leisure routes that WestJet can’t make money flying itself. That’s a lot of flying into secondary US airports but also within Canada as low cost operators like Flair surge and make the market more competitive. I remain highly skeptical of this plan since airlines within an airline have simply not worked elsewhere.

You’d think that would be about the extent of WestJet’s opportunity, but you’d be wrong. WestJet then said, “hey, those Q400s are great, but what about Dawson Creek? Nobody flies there, and there are at least 7 people that we could get to feed into our network.” And so, WestJet Link was born in 2018.

WestJet Link July 2022 Route Map via Cirium

WestJet link is actually operated by Pacific Coastal Airlines on Saab 340s to go to places where demand can’t even support a Q400.

That’s it, right? Of course not. WestJet is still relatively weak on the Atlantic side of the country, but there isn’t a huge amount of opportunity… without buying someone out, and that’s how we get to last week’s news.

Sunwing will now give WestJet more of a presence in the east, and it will significantly beef up its vacations product. Integrated vacation tour operators are a big deal in Canada, much more so than in the US. Sunwing and Air Transat are massive travel agencies that also happen to fly their own airplanes.

WestJet had WestJet Vacations, and now it will just integrate that into Sunwing. But the airline will remain separate as well, which seems rather odd. Sunwing will remains as a brand, and it will be based in Toronto as well as having an office in Montreal. This does complement the currently WestJet network in a way that Air Canada thought Air Transat would also do… but Air Canada is too big. WestJet and Sunwing probably aren’t.

Like most of WestJet’s growth over the past decade, this feels like another attempt to find a new avenue in which to expand since existing avenues are running out of opportunity. There’s only so much you can do in a nation of less than 40 million people, but WestJet keeps desperately trying to find a path forward.

Now with some well-funded ULCCs coming on the scene like Flair and Lynx, WestJet is going to continue to face more competition. Maybe the airline thinks going vertical into other parts of travel is the way forward, but that continues to be a risky road. Complexity is not generally the way to success.

12 comments on “WestJet Moves Into a New Business Once Again With Sunwing Acquisition

  1. This is part of the Neeleman effect it seems. Start an airline, get off to a good start, lose focus, try to be everything. Look at JetBlue atm, I have no clue what airline they want to be. Breeze already feels disconnected from a purpose.

    1. Well Breeze said the purpose was to serve city pairs nonstop that didn’t have service already. Of course that was hot air, at least so far.

      1. That may be the case from Breeze’s focus cities, at least at our local airport (PVD) MX has consistently added destinations that haven’t had nonstop service since the 90s on a Beech 1900 or Saab 340 (RIC, ORF, CHS), former hubs that have lost service (PIT) or ever (LAX-announced today).

        1. Good point re PVD. Hope to see more of that type of service. Great boon for the secondary markets as well.

  2. The SunWing (and even the WestJet 737) route maps look a little like Sun Country’s route map, in terms of mostly flying people south to warmer locales, with the exception that Sun Country does some shorter flights from places like MSP to the Northeast, Midwest, and mountains (Rockies / Appalachians). Then again, I guess “help pasty white northerners escape the snow by flying them south to warm beaches in the winter” is rather a broad & large market for many airlines.

      1. As a visual, perhaps you could show Lufthansa as a hydra from Greek mythology, given that it seems to sprout two new brands / subsidiaries for each one that it shuts down.

    1. I know the European industry is different because of the complexities of labour contracts there compared to the US or Canada, but this is bordering on the ridiculous. If it was just regional lift providers I could understand, but I’ve had to explain to several people here in Tampa that “Eurowings Discover is…well, sort of Lufthansa, but yet kind of, well, not.” Then they say “well, I flew Lufthansa before out of Kennedy, how will this compare?”, which leads to “well, Tampa use to actually have Lufthansa Cityline, not that Lufthansa, so…”

      It’s even harder to explain the proliferation of Canadian brands. We have Westjet in TPA and Swoop in PIE, right across the Howard Frankland Bridge, and we have both Air Canada and Air Canada Rouge in TPA (and Rouge seasonally in SRQ). “What’s the difference?” “Well, do you remember Continental Lite? No? How about Metrojet or Ted? No? Ok, it’s like if Delta owned Frontier or Spirit…”

      (It’s actually easier if you use a hotel analogy where each major group seems to have about 50 different brands at slightly different price points.)

  3. Great article..insightful,.thanks for the focus on Canada. WestJet the little airline that got to be a medium airline and still and yet after all these years does not know what it wants to be when in grows up. So much to consider in this article….but however you cut it Canadian airlines buying mixed companies like Air Transat or Sunwing may be buying economies of scale in terms of planes or routes..but they are taking on liabilities. Both AT and Sunwing as holiday airlines are stretched because they “diversified” “vertically integrated” whatever you want to call into buying. leasing , operating hotels/holiday properties. Looks good as a concept…not so much in reality. Non congruent businesses, They also bought in destinations that many Canadians have seen given our need to flee the cold over the years. Cuba, the Dominican, parts of Mexico…come to mind.

  4. And another Canadian update – Air Transat and Porter are going to codeshare.

    https://www.newswire.ca/news-releases/air-transat-and-porter-airlines-conclude-code-sharing-agreement-832669271.html

    If Porter’s E195-E2 expansion plans go off as intended, this could create a major new player in Canada…which raises the inevitable question: can Canada support three major airlines/alliances and all the smaller fish and the “airline within an airline” brands?

    This could get bloody.

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