The purchase has been pending the government approvals that the airlines today received from Ottawa. The deal is expected to close soon.
Air Canada’s competitors have been against the deal that would further cement Air Canada’s dominant position on flights within and to/from Canada.
The government also used the pandemic as an excuse to approve the deal. Air Transat may not have been able to survive without outside support.
Here’s the release from Transport Canada:
Government of Canada approves proposed purchase of Transat A.T. Inc. by Air Canada
Air travel is essential to Canada’s economic growth and prosperity. Travellers and businesses alike benefit from a safe, efficient and resilient air industry.
The Honourable Omar Alghabra, Minister of Transport, today announced that the Government of Canada has approved the proposed purchase of Transat A.T. Inc. by Air Canada, subject to strict terms and conditions that are in the interests of Canadians.
In determining the proposed purchase is in the public interest, the Government of Canada considered a broad range of factors, such as level of service, wider social and economic implications, the financial health of the air transportation sector, and competition.
The COVID-19 pandemic was a key factor in the final decision. As Transat A.T. itself noted in December 2020, current uncertainty casts doubt on its ability to continue, as it faces significant financing challenges. Noting the effects of the pandemic on air service in general, and on Transat A.T. in particular, the Government of Canada has determined that the proposed acquisition offers the best probable outcomes for workers, for Canadians seeking service and choice in leisure travel to Europe, and for other Canadian industries that rely on air transport, particularly aerospace.
The public interest assessment conducted by Transport Canada was complex, and necessitated a rigorous analysis and consultation with Canadians and stakeholder groups. Online public consultations ran from November 4, 2019, to January 17, 2020. The public interest assessment also included input from the Canadian Commissioner of Competition, who looked at how the proposed purchase would affect competition in the air sector; and his report was published in March 2020. Transport Canada completed the public interest assessment in May 2020.
This proposed acquisition, which was endorsed by Transat A.T.’s shareholders on December 15, 2020, provides clarity and stability with regard to the company’s future, despite the effects of the pandemic. It will also result in enforceable terms and conditions intended to facilitate future connectivity and competition on routes to Europe previously operated by Transat A.T. These terms and conditions reflect extensive engagement with Air Canada and Transat A.T. regarding measures they were prepared to undertake to address issues raised by the public interest assessment.
The Government of Canada is aware that some Transat A.T. customers are still waiting for refunds for flights cancelled due to COVID-19. Refunds are an integral part of the negotiations with airlines regarding any assistance plan, and the government will continue to take into account the needs of Transat A.T. customers.
Above and beyond the terms and conditions, Air Canada will have a duty to ensure that, as a subsidiary of Air Canada, Transat A.T. will provide communications and services to the public in both official languages.
The terms and conditions associated with the proposed acquisition include:
- Measures to facilitate and encourage other airlines to take up former Transat A.T. routes to Europe;
- Preserving the Transat A.T. head office and brand in Quebec;
- Employment commitment of 1,500 employees around the new entity’s leisure travel business;
- Commitment to facilitate aircraft maintenance in Canada, prioritizing contracts in Quebec;
- A price monitoring mechanism; and
- Launch and operation of new destinations within the first five years.
As per the legislative process, the final decision rests with the Governor in Council.
“Given the devastating impact of the COVID-19 pandemic on the air industry, the proposed purchase of Transat A.T. by Air Canada will bring greater stability to Canada’s air transport market. It will be accompanied by strict conditions which will support future international competition, connectivity and protect jobs. We are confident these measures will be beneficial to travellers and the industry as a whole.” The Honourable Omar Alghabra Minister of Transport
Fewer competitors to Air Canada means higher prices for domestic and international flights to/from Canada, when travel again takes off, as it eventually will.
Air Transat had seasonal service to several European destinations, and I flew once with them from Toronto to Glasgow at a one-way price of $368 back in 2013!
Transport Canada and CTA (Canadian Transportation Agency) are awful regulators. They have not even mandated domestic airlines to provide refunds for canceled services.
Passengers flying to/from/through the United States or from EU/EEA to Canada are protected by the US and European Union legislation. Canadian-based airlines have been forced to provide refunds to these passengers leaving domestic fliers cash as a hostage waiting for a government bailout before refunds are processed.