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WestJet sale could lead to cheaper fares say some analysts

Last Updated May 14, 2019 at 9:27 am MDT

WestJet president and CEO Ed Sims addresses the airline's annual meeting in Calgary, Tuesday, May 8, 2018. THE CANADIAN PRESS/Jeff McIntosh
Summary

Onex announced it was purchasing WestJet for $5 billion on Monday

The sale could mean tougher competition with other airlines and force a price fare war

CALGARY (660 NEWS) – One of the big questions coming out of the sale of WestJet to Onex is how it will affect passengers.

Several analysts are already saying that the big purchase could mean lower ticket prices for air passengers.

While that’s still too early to tell, analyst Karl Moore from McGill University expects Onex to look at cost-cutting at WestJet without damaging the airline’s corporate culture and customer
service and that may include some fare price wars in the short term.

“If you have a stronger competitor and there’s essentially two big competitors in Canada, Air Canada and WestJet. If the second player is strengthened, that should be good news for Canadian consumers and flyers.”

READ MORE: Experts, travellers react to sale of Calgary based WestJet

Toronto based analyst Tony Chapman agrees that a price war could be imminent which isn’t new for the airline industry.

“Onex is a very aggressive competitor and they’re going to try to exploit the weaknesses of their opponents and the big tiebreaker in travel right now because of all the aggregator sites like Booking.com and Trip Advisor is price point. I think in the short term this is going to play to the passenger because of the deals that they’ll be dangling in front of us.”

Chapman, however, points out that WestJet lacks a great loyalty program which Onex will likely address.

Not everyone though is seeing good deals for travellers as a result of the WestJet sale.

Calgary airline analyst Rick Erickson says travellers will switch airlines if a fare is even a few dollars cheaper and doubts a price war will be coming anytime soon.

The Onex deal will see the private equity firm pay $31 a share for the airline and is expected to be finalized by early next year.

WestJet will be making an announcement on the sale at 10:00 a.m. Tuesday.