Avianca & Viva Present Appeal To Colombian Government’s Denial of Merger

Yesterday, Avianca announced that along with Viva, the two Colombian airlines filed an paperwork with Colombia’s civil aviation authority known as Aerocivil, appealing the government’s decision to deny the merger and integration of the two airlines into a holding company called Abra.

Now that Viva and Avianca have presented an appeal, the Colombian government has 2 months to issue a ruling.

Avianca said in a statement that if the Colombian government would approve the merger, the airlines would:

1. Return a relevant percentage of airport slots – landing and takeoff permits at Bogotá’s El Dorado international airport to Aerocivil and assign slots with associated assets to competitors so that other airlines can expand operations in El Dorado.
2. Maintain the separate Viva brand and its low-cost model while preserving the greatest number of jobs, keeping a number of its planes and the operation of the routes in which Viva flies exclusively.
3. Protect air fares on the three routes both airlines fly exclusively as a result of the transaction.
4. Offer codeshares or interline agreements with (Colombian government-owned) Satena on the routes where it is the only operator, saying this would strengthen the social role Satena plays connecting isolated communities in Colombia not served by major airlines.
5. Maintain Viva’s interline agreements to ensure the connectivity that this company provides to passengers and other airlines.

“We are open and willing to continue building the history of Colombia and contribute to strengthening the air market so that the country is increasingly more and better connected. For this reason, we put different alternatives on the table so that the authority can study them in light of protecting the largest number of formal jobs; maintain the regional connectivity that Viva offers; as well as your brand and what makes it special. All this, aimed at ensuring the general well-being of air transport users, especially those who have flown for the first time thanks to Viva,” said Adrian Neuhauser, President and CEO of Avianca (above photo).

This morning, Viva issued a statement saying:

This week we presented to Aerocivil, the appeal to the response in which we were denied in the first instance the alliance between Viva and Avianca. Although we are respectful of the decision of the authorities, we trust in the guarantees offered by the system, and in the approval in the second instance of the application that has been submitted, given that the necessary of this decision is demonstrated for the survival of Viva in the market and the preservation of the quality of the low-cost model in the country.

The approval of this alliance by Aerocivil, guarantees air connectivity of the country at low prices, the source of work of the more than 5,000 direct and indirect collaborators of Viva, and the brand and model that “got Colombians off the bus” and flying in an airplane. It has taken us 10 years to get where Viva is now and that is not achieved overnight. We cannot allow Viva to disappear.

Allowing Viva to have a shareholder with financial backing will help it face the difficult context that all airlines are currently experiencing due to adverse macroeconomic conditions; continue transporting, as we have done these 10 years, more than 40 million passengers, and the more than one million who travel by air for the first time each year. It would allow, contrary to what some say, the guarantee of low prices to the millions of travelers who ride airplanes every year, thanks undoubtedly to the benefits of the low-cost model with quality and safety in which we are experts. All this is possible only if the approval of the alliance with Avianca is given.

The assessment of ‘market concentration’ and/or monopoly that has been talked about so much in the context of this process are imprecise, since, on the contrary, this is an open market to compete, and with guarantees of participation. Colombia, unlike other countries of the American region, has one of the most competitive airline industries, demonstrated by the offer of eight suppliers of domestic flights and more than 20 for international flights. This figure will undoubtedly continue to grow.

Viva trusts that the proposals and solutions presented in the framework of the appeal will resolve the concerns of the Aviation Authority and guarantee the permanence of Viva in the market and with it, the low-cost model in Colombia.