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.
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.
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.
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:
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.
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 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 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.