This morning Avianca announced that it is making a partial appeal of Colombian civil aviation regulator Aerocivil’s ruling approving Avianca’s takeover of insolvent Colombian low cost airline Viva, asking for certain modifications of the strict conditions Aerocivil imposed in its conditional approval.
For context, almost exactly a year ago, the shareholders of Avianca joined with the shareholders of Brazilian airline Aerolinheas Gol to create a holding group called Abra, and also purchased Viva from Irelandia Aviation and minority shareholders. Colombian regulators didn’t take kindly to the deal being done before seeking prior approval from aviation and competition regulators, and several months later, denied the merger. Meanwhile, like an airline stuck in a holding pattern running low on fuel, Viva no longer had access to additional capital, leading to its insolvency and cessation of operations in February of this year.
Last month, after Viva began losing planes to lessors and key employees to competitors, Aerocivil reversed its decision and approved the merger under strict terms to protect competitivity in the Colombian domestic aviation market. Meanwhile, it also approved the market entry of Chilean aviator Jetsmart for domestic routes in Colombia, and saw the collapse of Colombia’s other low cost airline, Ultra Air; also founded by aviation entrepreneur William Shaw, the founder of Viva.
Avianca issued a statement this morning saying that in order to preserve the jobs and aircraft left with Viva, it asks to retain a certain amount of the competitive slots from Bogotá’s crowded El Dorado Airport, and to focus Viva’s El Dorado destinations on the Colombian destinations of San Andrés, Leticia, Santa Marta and Riohacha.
San Andrés is a Colombian Caribbean archipelago and popular vacation destination that has been devastated by the collapse of low cost carriers Viva and Ultra. Tourism is down over 70% due to the loss of connectivity, causing a local economic crisis.
Santa Marta is a small city on Colombia’s Caribbean coast that serves as a popular alternative to Cartagena, with more ecotourism and ethnotourism alternatives. Riohacha is a small city in Colombia’s extreme northeast, near the Venezuelan border, and Leticia is a small, remote city in the southeast on the banks of the Amazon River adjacent to Colombia’s borders with Brazil & Perú.
Avianca said in a statement today (translated by Finance Colombia):
Within the framework of the integration request between Avianca and Viva that began more than eight months ago, after reviewing in detail the conditions set forth by the Aerocivil, Avianca filed appeals in which it requests clarifications and specific modifications that allow the conditions to be viable and applicable in light of the current reality of the country’s air market and that really make the operation of the low-cost airline viable.
In the current context of the Colombian air market, it is essential to activate quick solutions that give stability to the system and avoid further damage due to the loss of planes, routes or jobs that still depend on the Viva airline. For this reason, the resource seeks, among other things, that Viva can sustainably operate a minimum number of planes from El Dorado airport, while opening up ample space for airlines that want to fly to and from Bogotá. Additionally, it is offered that Viva’s operation during peak hours is focused on regions that require broad connectivity such as San Andrés, Leticia, Santa Marta and Riohacha.
Regarding the protection of passengers, Avianca accepts, in general terms, the conditions aimed at protecting passengers affected by the temporary cessation of Viva operations, including those who had purchased ‘Cuponera Viva’ [prepaid flight coupon books] with the low-cost [carrier].
In this regard, Adrian Neuhauser (above photo), President and CEO of Avianca said: “The purpose of the resource is to guarantee the minimum conditions to be able to operate what remains of Viva and thus preserve connectivity in the country and the offer to passengers. Since day one we have proposed solutions and protected hundreds of thousands of affected users. We emphatically reject the insistence of some competitors to hinder the process with the sole purpose of making what remains of Viva disappear.
Taking into account the urgency of the affected users to solve their situation, as well as the need for stability in the Colombian aeronautical sector, we trust that Aerocivil will analyze the clarifications in light of the current reality of the low-cost.”
Finally, Avianca highlights that, seeking to preserve the stability of the sector, it has led the protection by relocating more than 100,000 Viva and Ultra users free of charge, -86% of the total passengers of both airlines-, being the only company that has sustained the relocation of affected users at no cost.