This all sounds suspiciously like what Air Canada initially tried to do with Rouge.

If "my" airline tells me that my flights to vacation destinations need to be on some watered-down, low-service, zero-legroom sub-brand...
(a) that renders my WestJet Rewards virtually worthless, and
(b) I'm gone.

For a Hawaii vacation with my family, I'd rather connect through Seattle on AS (and pay for it) rather than fly on some charter style service, i.e. Sunwing. I'd have no reason to keep my business travel or other personal travel with a carrier that gives me loyalty rewards on a charter carrier.

Time will tell.