Columbia’s Avianca is still unhappy with the way the Colombian authorities handled the merger process with Viva Air, despite them signing off on the merger.
The Civil Aviation Authority of Colombia (Aeronáutica Civil de Colombia, Aerocivil) issued a statement on April 25, 2023, granting “conditional approval” of the merger between Avianca and Viva Air after it had settled appeals from several carriers, including Avianca, Viva Air, now-bankrupt Ultra Air, and JetSmart.
The conditions have remained the same that Aerocivil communicated previously in March 2023, following its study of the submitted request by the two Colombian airlines.
As such, Aerocivil issued the following conditions upon which the authority will provide full approval of the merger:
- To respect the rights of Viva Air passengers, including refunds for canceled flights
- Return of arrival and departure slots at El Dorado International Airport (BOG), Bogota, Colombia
- That Viva Air’s low-cost model remains on routes previously served by the airline
- Allow competitor airlines to enter the route between Bogota, Colombia, and Buenos Aires, Argentina, without reducing the supply of seats on the route
- Maintain a price ceiling where the new entity will control 100% of the market
- Guarantee price dynamism where the newly merged entity will control the majority of the market
Much like previously, Avianca was not happy with the conditions. In particular, the airline reiterated that in March 2023 and now, the conditions “make Viva’s operation unviable in the medium term, sentencing it to operational and financial failure” due to a lack of slots, for example. Furthermore, the conditions are impossible to comply with, “given the current reality of that company”, namely the fact that it has lost “more than half of its aircraft”.
Avianca-Viva Air merger problems
“Yesterday’s new resolution […] in which the reinstatement is ruled, basically reiterates the conditions of [the March 2023 resolution] so that, in essence, it does not allow a realistic transaction for the integration and rescue of Viva,” read Avianca’s statement on April 26, 2023.
Avianca also pointed out that the newest approval is not final, subject to appeal not only by Avianca and Viva but also by third parties “such as JetSmart, Wingo, and LATAM”.
“The process, which has been under study for almost nine months, must now add this phase of appeals, making the rescue of the airline Viva gradually less viable,” added the Colombian carrier. “Every day that passes in the process is one day less for Viva, for its workers and for the entire value chain associated with its existence,” continued Avianca’s statement.
According to ch-aviation.com data, Viva Air still has 10 Airbus A320neo aircraft that are currently inactive, with four Airbus A320s having exited the carrier’s fleet in February and March 2023.
“Today, undoubtedly, the speed of the authorities’ actions and the reconsideration of the unfeasible conditions imposed so far is essential to find a solution that will safeguard the existence of what remains of the low-cost pioneer in Colombia,” concluded Avianca.
In March 2023, another low-cost carrier in Columbia, Ultra Air ceased operations. Meanwhile, Viva Air has suspended operations in February 2023, entering a Business Recovery Process (Proceso de Recuperación Empresarial, PRE).
According to Avianca, the PRE process is set to end on May 9, 2023, following which, “Viva Air will lose the protection of the business recovery process” and make its rescue “impossible”.