The federal government has approved WestJet Airlines' acquisition of Sunwing Airlines and Sunwing Vacations, it announced on Friday, saying the deal is "in the interest of Canadians."
Transport Minister Omar Alghabra said in a statement that the decision "was not taken lightly, specially in light of everything that happened over the holidays for those who flew with Sunwing."
"After considering the pros and cons, we have made the decision that will allow Sunwing to continue to provide affordable vacation packages to Canadians, create more good jobs, and protect current jobs as well as Canadians who have already purchased tickets," Alghabra said.
"The agreement will also be accompanied by strict terms and conditions to ensure the public interest, including with regard to competition, connectivity and baggage handling."
The conditions for the deal include extending Sunwing vacation package offerings to five new Canadian cities, maintaining capacity on routes most affected by the merger, increasing regional connectivity and maintaining a vacations business office in Toronto and a regional office in Montreal for a minimum of five years.
WestJet announced in March 2022 that it had reached a definitive agreement to acquire Sunwing Airlines and Sunwing Vacations, saying the deal would "deliver new travel options and greater value for travellers in the rapidly expanding leisure and work-from-anywhere travel markets."
Transport Canada had been assessing whether the acquisition was in the public interest, consulting with Canadians and stakeholder groups.
The government said that in the absence of WestJet's acquisition, "Canada's air transport sector could have faced greater instability, including job losses, a significant reduction of affordable vacation offerings, negative impacts on passengers, and the Government not being repaid sizeable loans."
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.