Transat - Air Canada merger called off

[FlyerTalker]

Although being approved by Canadian authorities, the EU has raised enough objections to kill the deal.  So Transat remains independent, and may still be acquired by another entity.

 

I know a number of posters here have used Transat in the past, so keeping folks up to date.

 

https://ca.travelpulse.com/news/airlines/air-canada-and-transat-mutually-agree-to-call-off-deal.html

[iancal]

Thanks.  We live in Canada.  The very last thing we want is for the likes of Air Canada or Westjet to swallow up AIr Transat or Transat Holidays.   We are customers of both Transat divisions.

 

The competition is important to us.  We have routinely fly to Europe on Transat each year for the past several years.   Often from Toronto to a  European city and return from to different European city  to our home in Calgary.    The difference in the economy fare is typically $300 per person.  Sometimes more-for what is essentially the same, and frequently much better service than we have previously had on AC economy.

 

I have many, many business miles on AC, economy and business.  I actually prefer Transat's economy service to AC's. 

 

I hope that Transat can survive or find a good investor.

Edited April 2, 2021 by iancal

[Fairgarth]

Now this is just bleedin' ridiculous.  The takeover was approved by the Canadian Government.  How can Europeans block it?  Did Canada stop BA taking over British Midland?  Lufthansa taking over Swiss?  Air France and KLM cudding up? etc etc.  I fear Air Transat is finished.  There is a long list of Canadian airlines that have gone bust and ceased operations.  None of them suffered a pandemic, a 90% drop in travel or grounding their entire fleet for several weeks but they went bust anyway.  Unlike many others, the Canadian Government has offered zero financial help to its airline industry in this pandemic.  Personally, I would be reluctant to book Air Transat until I can see it will survive for sure.  If it goes bust, your money is down the drain.

[FlyerTalker]

In the days of CPAir/Canadian, there was a joke that went:

 

What is the meaning of the word "Canada"?

It's an old Iroquois word meaning "can't support two airlines"

 

As for the EC and the merger:  Wanna fly into the EU?  Gotta abide by the rules of the EU.

[iancal]

I agree.  It does not make sense.  But we are certainly happy that the deal is off.  Air Canada would have ruined the Transat advantage for us on European flights.

Edited April 5, 2021 by iancal

[Zach1213]

Yep, I am confused. I know very little about these kind of laws but...I just don't get how Europe can have a say on two Canadian airlines merging or not merging. Couldn't imagine Australia telling the US that Delta and United, for example, couldn't merge. 

[SelectSys]

On 4/3/2021 at 11:30 AM, Fairgarth said:

 How can Europeans block it? 

Because the airlines serve Europe and the EU has an interest in maintaining general competition for service between Canada and Europe?

 

Maybe part of this EU decision is an example of the "golden rule" in terms of having the power in a trading partner relationship.  EU telling Canada - If you want to serve Europe, you must submit to our competition decisions.

 

5 hours ago, Zach1213 said:

Couldn't imagine Australia telling the US that Delta and United, for example, couldn't merge.

They might be able to deny the merged entity with access to the Australian market.  It would be a business decision for the future combined entity to decide whether this restriction would be sufficient to call off the merger.

 

Other air service rights defined by treaties might be in play as well.

 

 

 

 

[bennybear]

Transat lost us as customers when they used Old Thomas Cook planes and flew using British rules.  Which meant you had to pay even for water on a transatlantic flight!  

[navybankerteacher]

On 4/3/2021 at 4:15 PM, FlyerTalker said:

In the days of CPAir/Canadian, there was a joke that went:

 

What is the meaning of the word "Canada"?

It's an old Iroquois word meaning "can't support two airlines"

 

As for the EC and the merger:  Wanna fly into the EU?  Gotta abide by the rules of the EU.

Of course, the EU should proceed with a tad of caution -- the more they act as one entity, the more they risk being demoted from a continent with many seats to a single UN member. Or, perhaps, the US might restructure into 50 "nations" to mirror the EU.

[scottbee]

On 4/3/2021 at 11:30 AM, Fairgarth said:

Now this is just bleedin' ridiculous.  The takeover was approved by the Canadian Government.  How can Europeans block it?  Did Canada stop BA taking over British Midland?  

 

At least 1/2 of all of Air Transat's routes are to Europe; that's why the EU had a big say in it.  I think pre-pandemic, Transat actually served more European airports than AC did (albeit a lot were just once/twice week).

 

[Fairgarth]

On 4/3/2021 at 1:15 PM, FlyerTalker said:

As for the EC and the merger:  Wanna fly into the EU?  Gotta abide by the rules of the EU.

 

What's sauce for the goose....

 

My guess is that the great majority of passengers on Air Canada and Air Transat are Canadian so this does very little to protect European consumers.

 

Lufthansa owns Swiss, Austrian and Brussels, all four of which fly into Canada.  So under Europe's own rules, maybe they should pick one?  Or perhaps Europe's rules don't apply to Europeans?  Or maybe we need to invent Canadian rules to combat this nonsense?

[iancal]

Our son got his refund from Transat this past week.  It was for flights that were cancelled last year.

 

Refunding customer monies was one of the conditions of a recent Government loan guarantee for Transat.

[em-sk]

On 4/8/2021 at 12:48 PM, Fairgarth said:

 

What's sauce for the goose....

 

My guess is that the great majority of passengers on Air Canada and Air Transat are Canadian so this does very little to protect European consumers.

 

Lufthansa owns Swiss, Austrian and Brussels, all four of which fly into Canada.  So under Europe's own rules, maybe they should pick one?  Or perhaps Europe's rules don't apply to Europeans?  Or maybe we need to invent Canadian rules to combat this nonsense?

 

Actually Air Canada, United and Lufthansa has a profit sharing agreement in place for travel between North America and Europe.  Behind they are basically operating those flights as a joint venture.

 

The competition authorities had issues with Air Transat flights being added to that mix.

[iancal]

...we are glad that they did.  Just about every year we fly in to one European city and fly home from another.  Usually on a Transat ticket with seven or eight weeks in between.

 

Why?  First off we like Transat.  But, the ticket is typically several hundred dollars less  than AC or AC's partner airlines.   

[Fairgarth]

On 5/16/2021 at 3:41 PM, em-sk said:

 

Actually Air Canada, United and Lufthansa has a profit sharing agreement in place for travel between North America and Europe. 

 

Profit sharing?  Really?  Are you sure?  They are all members of Star Alliance but I didn't realize they were sharing profits.  Would that be legal for United?

[em-sk]

10 hours ago, Fairgarth said:

 

Profit sharing?  Really?  Are you sure?  They are all members of Star Alliance but I didn't realize they were sharing profits.  Would that be legal for United?

 

Normally it would be illegal and a violation of anti-trust laws in the US, Canada, Europe etc.  So they needed to go and get special permission from authorities to do this.   They basically operate as a joint venture for travel between North America and Europe. 

 

They still compete with each other in other markets.   As an example, Air Canada and United do not have anti-trust immunity for travel between Canada and the US.  United and ANA have a similar agreement for travel to Asia that Air Canada is not part of.

 

Not all Star Alliance members are part of this special deal.  For example TAP Air Portugal is part of Star Alliance but is not part of this joint venture.

 

United, Lufthansa and Air Canada under their joint venture agreement they pool costs, co-ordinate schedule and price.  Basically they are not competing with each other.   

 

Here is a news article from when the agreement was first setup: https://www.cbsnews.com/news/dot-approves-continental-united-lufthansa-air-canada-antitrust-immunity-with-limited-carveouts/

 

These types of agreements are difficult to get regulators to approve and frequently come with lots of strings.  WestJet and Delta proposed something similar for Canada-US travel.  However the regulator required WestJet to sell domestic seats at wholesale to any potential competitor and to offer to give up its LaGuardia slots.  WestJet and Delta found the requirements excessive and did not move forward with the deal.

 

 

 

[FlyerTalker]

Delta, Air France-KLM, and Alitalia have a similar agreement on Trans-Atlantic traffic, as do British, American, Iberia, and Finnair.  This list is a bit dated, but interesting:

 

https://www.businesstraveller.com/business-travel/2017/12/06/ten-noteworthy-joint-ventures/