Colombia’s civil aviation authority has annulled its earlier rejection of a proposed merger between Avianca and financially strapped discounter Viva Air, saying it will restart a review without forcing the companies to re-apply.
The Colombian regulator Aerocivil on 18 January admitted to “the existence of a substantial irregularity in the processing of the administrative action in the first instance”.
The file will be returned to the country’s Directorate of Air Transport and Aero-Commercial Affairs for further consideration.
Last November, Aerocivil shot down the planned collaboration, which had been announced seven months earlier, saying it would be a “setback” for competition in the region.
At the time, Avianca blasted the regulator for its finding. The carrier’s chief executive Adrian Neuhauser said the decision went “against the needs of the country and ignores the potential effect that the disappearance of Viva would have on users and the market”.
Now, Aerocivil says there were administrative errors in the process. It has pledged to make a decision “aimed at strengthening the industry and the national air market, in all its segments,” the regulator says. Aerocivil “will communicate the final decision to [the] public in a timely manner”.
In April 2022, owners of Avianca and Viva struck a deal to form a joint holding company they said would provide greater financial stability for the Latin American carriers post-pandemic, with Viva’s Peruvian and Colombian divisions operating independently under its own brand. Four months later, Avianca had 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 air traffic, including 16 routes without a 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. The airlines appealed the ruling on 24 November.
Avianca greets Aercivil’s reconsideration, describing its proposal as a means of keeping Viva viable.
“Avianca and its shareholders reiterate their firm conviction that the rescue of Viva benefits passengers, employees and the country’s connectivity and economy, and reaffirms its willingness to participate in this effort, protecting Viva’s brand, network and low-cost business model,” the carrier tells FlightGlobal on 19 January.
“Avianca will act in accordance with the authority’s decision to seek a solution to Viva’s situation and is willing to provide all the information required to expedite the final decision, trusting in the strong institutional framework of the country and in the speed of the process, as announced by the competent authority.”
According to Cirium fleets data, Avianca operates 101 aircraft and serves to 63 destinations in Latin America, North America and Europe, with Viva Air operating 19 aircraft to 26 destinations across the Americas.
Avianca last year successfully completed a two-year restructuring process. It voluntarily entered the US Chapter 11 bankruptcy protection process in May 2020 after Covid-19 decimated international air travel.
In 2022, Avianca and Brazil’s Gol also agreed to join under a holding company called Abra Group. Avianca has said the Viva transaction remains separate from Abra.