Avianca has slammed an 8 November decision by Colombia’s civil aviation authority to block its planned tie up with financially struggling low-cost competitor Viva Air.
“We are concerned about the direction of the decision, as it goes against the needs of the country and ignores the potential effect that the disappearance of Viva would have on users and the market,” Avianca chief executive Adrian Neuhauser says on 8 November. “At Avianca, we reiterate our willingness to actively participate in rescuing Viva, seeking to maintain connectivity for travellers, strengthen tourism and preserve formal employment.”
Colombia’s aviation regulator, known as Aerocivil, shot down the planned combination on grounds it would be a “setback” to competition in the region.
Avianca now says it will “make a detailed analysis of the Aerocivil’s decision and will evaluate all available legal alternatives to seek the necessary approvals”.
In April, owners of Avianca and Viva struck a deal to form a joint holding company to provide greater financial stability for the Latin American carriers post-pandemic, with Viva’s Peruvian and Colombian operations remaining independent. Four months later, Avianca requested accelerated approval by Colombia’s civil aviation regulator over concerns about Viva’s ability to compete in the face of increased financial pressure.
In its 8 November ruling, Aerocivil said the airlines collectively operate 59 national routes accounting for about 94% of the country’s domestic traffic, including 16 routes where they have no third competitor. It added that Viva would “disappear as an independent competitor” and that other airlines would be shut out of markets should the carriers combine under a holding company.
Aerocivil said the airlines are free to resubmit applications if they address those concerns.
Meanwhile, Avianca is pursuing a plan to join Brazil’s Gol as subsidiaries of a holding company called Abra Group.
Avianca stresses that the process to integrate Viva is “independent of the Abra Group, a project in which Avianca and Gol shareholders continue to move forward”.