More and more airlines seem to oppose the merger between Avianca and VIVA: nine companies have asked the Colombian authorities to be included as interested third parties in the process that could lead to the creation of Abra Group Limited, a commercial company that would be composed of Avianca, VIVA Colombia, VIVA Perú, GOL Linhas Aéreas and Sky Airline.
The companies that requested to participate in the process of acceptance or rejection of the integration are EasyFly, SATENA, Wingo, Aerolíneas Argentinas, LATAM Airlines, JetSMART, Air Europa and Lufthansa.
Ultra Air’s opposition
Low-cost airline Ultra Air has once again expressed its opposition to the merger process. The company founded by William Shaw (also founder of VIVA) and Oscar Herrera argues that, if the merger goes ahead, the two companies would take 65% of the domestic market, affecting smaller airlines and, ultimately, consumers.
In August, Avianca had formalised the request under the «Company in Crisis» legal process, following the drastic deterioration of the low-cost carrier’s financial situation in recent times. However, Ultra Air’s lawyers reiterated their confidence that Colombia’s Aeronáutica Civil (Civil Aeronautics) will conclude that «the conditions for applying the efficiency exception do not exist» and reject the integration.
In a press release, VIVA stated that airlines face a volatile environment, driven by rising inflation, devaluation of local currencies and fuel price increases. «These factors affect our operations and represent a risk», said the airline, which recently suspended several of its routes.
However, Ultra Air maintains that «it has not been demonstrated that VIVA is in crisis any more than the rest of the competitors, it is not true that the assets linked to the company would be lost if there were a bankruptcy and, above all, there is no reason why, if that were to happen, consumers should have to save it through expensive prices».
Voices against the possible merger between Avianca and VIVA
Last April, shareholders of both companies signed an agreement to become part of the same business group and unify economic rights. Under the terms of the agreement, VIVA would be part of the same company as Avianca, although it would maintain its own corporate identity.
Avianca, Colombia’s largest airline and one of the largest in South America, said at the time that the merger would benefit customers by enabling a more efficient cost structure that would allow it to offer lower prices. Days later, the shareholders of Avianca and GOL Linhas Aéreas announced their intention to create the Abra Group Limited.
However, the will to integrate the two airlines was opposed by other Colombian carriers, as well as players in the tourism sector. They argue that VIVA’s problems also affect the rest of the airlines and that the merger would leave Avianca in a dominant position, allowing it to restrict its competitors and ultimately harm users.
