The Colombian commercial aviation market is currently experiencing uncertainty as the Civil Aviation Authority is expected to issue its ruling on Viva’s integration into Avianca during the day.
The decision from Aerocivil was already expected last Thursday, when even the Minister of Transport, Guillermo Reyes, had said that it would be announced by 5 p.m. that day.
However, in the evening they issued a statement indicating that they would postpone the decision again to Tuesday morning after having “studied and assessed the request from the companies involved, the position of third parties interested, and the elements provided by unions, citizens, and the Superintendency of Transportation.”
See also: Viva – Avianca Integration: Colombian Authorities Defer Ruling as Uncertainty Grows
It has been a year since both companies announced their intention to combine their operations at the end of April 2022, citing Viva’s severe financial situation due to the post-pandemic macroeconomic context and the ramifications of the Russian invasion of Ukraine.
In early November, Aerocivil issued a negative ruling against the integration, stating that their study concluded that the integration poses risks to competition in the aviation sector and consumer welfare.
“This integration would lead to the creation or reinforcement of the market power of Avianca, Viva, and Viva Air Perú, considering they operate on 59 national routes that account for 93.7% of domestic traffic in Colombia, and that they coincide on 29 of them, in addition to being the only carriers on 16”, they detailed, emphasizing that this way the Colombian market would regress to levels from seven years ago in terms of free competition.
In response, Avianca proposed to return a percentage of slots at El Dorado airport in Bogotá and transfer them with associated assets to competitors, in addition to committing to maintaining the Viva brand and the low-cost model, preserving the “highest number of jobs” and retaining “a number of their planes and the operation of the routes where Viva exclusively flies”, establishing fare protection on routes where both are the only operators, and maintaining and promoting new interline or codeshare agreements.
In February, the “soap opera” added new protagonists when JetSMART, LATAM, and Nella Airlines expressed interest in acquiring 100% of Viva, although few believed they actually had a chance (or even the intention) to take it over.
Finally, as a self-fulfilling prophecy, on February 28, Viva suspended all its regular flights, stranding thousands in Colombia and several South American countries to which the ultra-low-cost airline had expanded over the past two years, aiming to replicate a “hub of the Americas” like Copa’s in Medellín but in an ultra-low-cost format.
See also: VIVA becomes the main international flight operator in Medellín
In an attempt to calm market anxiety, at 6:36 AM local time on Tuesday, Aerocivil published a brief statement on its Twitter account stating that “regarding the pre-evaluation request for an integration submitted by Avianca, Viva, and Viva Peru, the Air Transportation Directorate of Aerocivil reports that, prior to any public statement, the decision must be notified to the interested parties”.
