Air Canada is planning to purchase competitor Air Transat for about $488-million, it was announced Thursday, and has secured 30 days for exclusive negotiation.
Transat AT Inc. offers vacation packages, hotel stays and air travel under the Transat and Air Transat brands, going up against Air Canada Vacations in the leisure travel market. Analysts say the addition of Transat will provide Air Canada Vacations with a broader reach.
Air Canada chief executive Calin Rovinescu said a combination with Transat represents a great opportunity for both companies.
“The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel,” Rovinescu said in a statement.
Industry competition aside, what does the move mean for passengers and their bottom line?
Tiberio Branco, owner of Alfa Mar Travel says in his experience, his clients get used to an airline “like you get used to a restaurant” and they may be apprehensive of possible changes.
“People are concerned because we have been with Transat for the past 30 years and of course monopolies are not good for anybody,” he says.
Founder of Air Passenger Rights, Gabor Lukacs agrees, saying prices will go up because competition is decreasing, with one less option available.
“This proposed merger is a step in the wrong direction. It decreases competition, may well decrease the supply and as a result I’m afraid that consumers will suffer,” he says.
But while passengers may fear that less competition will mean higher prices, there are other international airlines flying to the same destinations.
Robert Kokomo, President of AirTrav, feels the stiff competition will likely drive Air Canada to do its best to avoid turbulence.
“It’s a very competitive marketplace,” he says. “Even Air Canada, with a higher degree of market share, wouldn’t necessarily want to tinker too much, at the risk of losing market share to Air France for example.”
CityNews compared Air Canada Rouge — the airline’s budget option — to it’s main competitor, Air Transat, based on current prices and other factors that affect the passenger experience.
Comparing a one-way flight to Barcelona, for example, Air Transat offers a cheaper seat but charges $55 for your first bag compared to no baggage fees for your first bag on Air Canada Rouge. Seat selection is an added cost on Air Transat but there’s a few more inches of leg room to go with it.
Move the slider below to see how the two providers compare in terms of other factors including food, entertainment and more:
Sources: Air Transat, Air Canada Rouge, SeatGuru
With files from The Canadian Press