The key hubs involved on the Mexican end, and operated by Viva Aerobus, are the capital city and Cancun, which then make it easier to connect to 28 more cities in the country, including Guadalajara, Monterrey, Acapulco, Oaxaca, Puerto Vallarta, and Chihuahua.

In Colombia, the Avianca side of the agreement will allow travelers to arrive to Bogotá and connect with 23 cities, including Medellín, Cartagena, Cali, Barranquilla.

What exactly is an interline agreement? It differs from the more commonly known “codeshare” arrangement between airlines, and Manuel Ambriz, chief commercial offer of Avianca, added more insight in the announcement.

“Viva Aerobus is one of the fastest growing airlines with one of the most robust route networks in Mexico,” said Manuel Ambriz, chief commercial offer of Avianca. “An interline agreement like this allows our customers to purchase a single ticket through all our direct sales channels and travel agencies, through a single transaction to make guaranteed connections between Avianca and Viva Aerobus flights within Mexico (or vice versa), with a single check-in and tagged baggage to the final destination.”

This is the full list of cities included in the interline agreement:

Mexico

Acapulco, León, Ciudad de Juárez, Culiacán, Chihuahua, Guadalajara, Hermosillo, Huatulco, Mérida, Monterrey, Mazatlán, Nuevo Laredo, Mexico City, Oaxaca, Puebla, Puerto Vallarta, Puerto Escondido, Querétaro, Reynosa, Los Cabos, Tampico, Tuxtla Gutiérrez, Tijuana, Toluca, Torreón, Veracruz, Villahermosa,Ixtapa/Zihuatanejo

Colombia

Armenia, Barranquilla, Barrancabermeja, Bogotá, Bucaramanga, Cali, Cartagena, Cúcuta, Ibagué, Ipiales, Leticia, Medellín, Monteria, Neiva, Pereira, Popayán, Pasto, Riohacha, Santa Marta, San Andrés, Valledupar, Villavicencio, Yopal

“The alliance with Avianca, an airline with more than 100 years of history and recognized as one of the most important in the continent, strengthens our air offer between Mexico and Colombia,” said Jordi Porcel, director of alliances at Viva Aerobus. “This not only multiplies the possibilities for our passengers to connect with their loved ones, do business, and tourism, but also increases the commercial and cultural exchange between our countries. With more than 150 destinations, Mexico’s youngest fleet and lowest prices, Viva Aerobus is positioned as a reliable and affordable travel option.”

(Photo credit: Viva Aerobus)

The problem, at least as both competitors and Colombian airline regulators saw it, was that a combined Avianca – Viva merger would control too much of Colombia’s domestic aviation market. Aerocivil, Colombia’s civil aviation regulatory authority originally rejected the merger, but then on appeal by the two airlines, Colombia’s Ministry of Transportation (Mintransporte) ordered Aerocivil to at least reconsider the deal, which it is currently (as of publication) doing. All parties expect a ruling shortly.

Complicating the situation, competing airlines Jetsmart and Latam, both out of Chile, have in the last month, submitted competing offers for Viva, much to the consternation of Viva’s controlling shareholders. The way this plays out may mean the difference between dominance and diminution for Avianca, though with multiple suitors, the survival of Viva seems to be more secure than last autumn when Aerocivil first ruled against their deal.

Here are some of the major actors in the hunt to acquire Viva:

MOBI FIA — MOBI Fundo de Investimento em Ações Investimento no Exterior was the controlling shareholder of Brazil’s GOL airlines, controlled by Constantino de Oliveira Junior.

GOL — Founded in 2001, GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL e B3: GOLL4) is Brazil’s largest airline. Operating on the low-cost model, Gol is primarily a domestic airline serving many Brazilian cities, but also flies to several international destinations throughout Latin America.

Avianca — Once controlled by Germán Efromovich, a South American Magnate with ties to Bolivia, Brazil and Colombia, he lost control when he defaulted on a loan from US based United Airlines collateralized by his controlling interest in Avianca.

South American magnate & former Avianca chairman Germán Efromovich

Avianca was founded in Barranquilla, Colombia by German entrepreneurs over 100 years ago, but had its corporate domicile in Panamá. After filing for bankruptcy, Avianca still has a Colombian base of operations but is domiciled in London.

Today, Avianca is owned by private equity firm Elliott International L.P., United Airlines controlled South Lake One LLC, and Kingsland International Group, which is controlled by Efromovich nemesis, El Salvador magnate Roberto Kriete. Kriete’s father started TACA airlines which Kriete merged with Avianca in 2013, giving him a minority stake in Avianca through his Kingsland Holdings. Kriete and Efromovich soon fell out though, after Kriete accused Efromovich of mismanagement and self-dealing. Ironically, Kriete opposed Avianca’s dealings with United Airlines.

In May of 2022, Avianca shareholders, through a vehicle called Castlesouth Limited, acquired a controlling economic interest in Fast Colombia S.A.S., the legal name of the airline known as Viva. Avianca could not yet take voting or operational control of Viva as the deal would have to be approved with regulators. It is analogous to acquiring non-voting shares in a company. Avianca shareholders also hold a convertible debt instrument from Chilean low-cost carrier Sky Airline S.A. In other words, Sky owes money to Avianca through a loan, but that loan can be converted into equity.

United Airlines — One of the largest legacy carriers in the United States, United (NASDAQ GS UAL) participates with Avianca and Panamá’s Copa Airlines in the Star Alliance. United became a major shareholder in Avianca when Germán Efromovich defaulted on a $400 million USD loan from United collateralized with Avianca shares. Apparently Efromovich took out the loan in an attempt to save his faltering Brazilian and Argentine airlines, which eventually failed.

United now holds its interest in Avianca through an entity called South Lake One LLC.

Abra Group — MOBI FIA entered into a deal with Avianca’s owners, South Lake One, Kingsland International Group, and Elliott International to combine GOL and Avianca under one UK-based holding group called Abra Group Limited, while retaining separate brands (at least initially). The new entity would conceptually look something like Europe’s International Airlines Group, that operates European airline brands Iberia, British Airways, Aer Lingus, Level and Vueling under one umbrella holding company. The Abra Group also seeks to add Viva to this, but so far their plans have been thwarted by Colombian regulators.

Roberto Kriete is chairman of Avianca, Abra Group, and Kingsland Holdings

Roberto Kriete is the chairman, Constantino de Oliveira Junior is the CEO, while Avianca’s CEO Adrian Neuhauser and GOL’s CFO Richard Lark are co-Presidents.

Jetsmart —Chilean low-cost airline that has also announced its desire to buy Viva. Jetsmart is majority-controlled by US-based Indigo Partners, an aviation private equity firm. American Airlines also has a minority stake in Jetsmart, though American is said to be interested in taking a stake in Colombian low-cost airline startup Ultra Air.

Jetsmart already flies between Colombia and Chile, but the airline has also been seeking entry into Colombia’s domestic aviation market. Last year, Colombian regulators tabled but did not reject Jetsmart’s entry, asking for more information on the airline’s relationship with American Airlines, and also expressing doubt that Jetsmart had the fleet capacity. This year, Jetsmart is due to take delivery of 14 new Airbus A320neo and A321neo aircraft, and has the stated ambition of a 100 aircraft fleet by 2026.

Indigo Partners — US-based aviation focused private equity firm established by William Franke. Indigo is an investor in Norway’s Wizz Air, Frontier Airlines in the US, Volaris in México, Cebu Pacific in the Philippines, and Canada’s Enerjet. Indigo also invested in Spirit Airlines and Tiger Airways. Though Indigo is an investor in Volaris with Kriete and Kingsland Holdings, its Jetsmart is acting against the interests of Kriete’s Kingsland, Avianca and Abra Group by competing for Viva.

Latam—Another Chilean airline, Latam is the largest airline based in South America, though it holds a minority position in the Colombian market. Latam was formed in 2012 when Chilean LAN and Brazilian TAM agreed to merge. The airline rebranded itself from the LAN and TAM brands to LATAM in 2015. Latam participated with American Airlines in the Oneworld alliance, but Delta Airlines broke that when it took a 20% financial stake in Latam in 2019. Qatar Airways also has a minority stake in Latam. This month, Latam also announced its intentions to compete for the acquisition of Viva.

Castlesouth—Castlesouth Limited is the UK based entity that acquired the majority economic interest in Viva air last year from Irelandia Aviation, but must wait on approval from regulators before it, Avianca, or Abra can take over voting and operational control. Castlesouth, like Avianca, is owned by Kingsland Holdings, Elliott Management, and South Lake One (United Airlines). Castlesouth through its lawyers,  Philippi Prietocarrizosa Ferrero DU & Uría, has publicly stated its strong preference for its deal to go through between Avianca and Viva rather than between Viva and competitors Jetsmart or Latam; to be expected as Castlesouth is controlled by Avianca’s shareholders.

Elliott International — Elliott International is an investment vehicle owned by Elliott Investment Management, a US based hedge fund controlled by billionaire Paul Singer. In the past Elliott has invested in projects of former Avianca controlling shareholder Germán Efromovich, and has since then held interests in Avianca through its bankruptcy to the present.

Irelandia Aviation —An aviation private equity firm with a track record of successfully developing early-stage airlines. Irelandia was instrumental in the launch and growth of Viva, and also Mexico’s Viva Aerobus, Singapore’s Tiger Air (now merged with Scoot), US-based Allegiant, and its original success, Ryanair.

Viva was the brainchild of Mexican entrepreneur William Shaw, who now runs Ultra Air.

Kingsland Holdings — This is the investment vehicle of El Salvador tycoon Roberto Kriete. Kingsland Holdings holds Kriete’s shares in Avianca, and in Mexican low-cost carrier Volaris. Kriete’s father founded TACA airlines which merged with Avianca in 2013. Though Kriete sued Avianca because of its dealings with United Airlines, United ended up installing Kriete as Avianca’s chairman after ousting Germán Efromovich, who initially did the deal with Kriete. Kingsland is now a shareholder of Abra Group, and of Castlesouth Limited.

Viva — The subject of it all, Fast Colombia S.A.S. was the brainchild of Mexican entrepreneur William Shaw, Juan Posada, Gabriel Migowski, and Frederik Jacobsen. The concept of a Colombian low-cost airline was actually the subject of Shaw’s Stanford University MBA thesis. The four presented the idea to Irelandia Aviation’s Declan Ryan who agreed to fund the startup, along with other investors, such as Colombian insurance and banking concern Grupo Bolivar. None of the founders remain with the airline, though Shaw went on to form competing low-cost carrier Ultra Air, and is a vocal opponent of the Viva-Avianca merger. Viva also owns a Peru subsidiary that operates domestic routes throughout the neighboring country.

Viva is run by Argentine-born former Latam executive Felix Antelo, who has guided the company through rapid international expansion and the COVID pandemic. Unlike Avianca and LATAM, under Antelo’s leadership, Viva has been able to avoid filing for COVID-related bankruptcy, though the company has recently entered a voluntary debt mediation process under Colombian law. UPDATE: Felix Antelo resigned last week and has been replaced by Viva executive Francisco “Pacho” Lalinde.

Viva is run by Felix Antelo

Viva’s growth has come largely at the expense of Avianca, with Avianca carrying 36.3% of Colombian domestic passengers, and Viva at 16.2%. Before Viva’s launch and a devastating pilot strike and lawsuits between shareholders Kriete and Efromovich, Avianca controlled over 60% of domestic traffic. Viva is quick to point out that their low-cost model also competes with terrestrial bus lines in Colombia and Peru, and the airline is proud of how many passengers have flown for the first time with Viva because of its accessible fares.

Latam held 20% market participation, Wingo, a Colombian low-cost subsidiary of Panamanian carrier Copa held 4.5%, Easyfly, a Colombian carrier specializing in smaller cities had 4%, and government owned Satena, which flies to more remote destinations, 2.9%. Other airlines held 18.1% of the market. Ultra air has rapidly been growing and this year we can expect it to have gained significant market share.

Viva’s management has issued several carefully worded statements urging the Colombian government to approve its acquisition by Viva, though both airlines prefer to call it an “integration” as Viva and Avianca shares would have a common owner. Avianca has pledged that Viva would continue to operate separately under its own brand.

American Airlines — American Airlines (NASDAQ: AAL) holds a minority stake in Jetsmart, which has submitted an offer for Viva. American Airlines had a close working relationship with Latam which was ruptured when competing US legacy airline Delta took a stake in Latam, as the airline seeks to expand its presence in South America.

Delta Airlines — Delta Airlines (NYSE: DAL) holds a minority stake in Latam, which has submitted an offer for Viva.

Qatar Airways — Qatar Airlines holds a minority stake in Latam, which has submitted an offer for Viva.

Sky Airline – This Chilean low-cost carrier owes money in the form of a convertible loan to the shareholders of the Abra Group. This loan could conceivably convert to equity, in which case the Abra Group would also become a part owner of Sky.

Ultra Air — Colombian low-cost carrier formed by Viva co-founder William Shaw, who after several years, left Viva on somewhat bitter terms after building the company and finally serving a short stint as CEO. Though the airline was his brainchild, he never had control of the airline’s board, and his shares in the company became diluted though multiple capital raises. On behalf of Ultra, Shaw has been a vocal opponent of the Avianca-Viva merger.

Analysis: A missed connection?

Should Abra Group manage to consolidate Avianca, Viva, and Gol, it could potentially dominate the South American airline market, especially the Colombian domestic market where it would have a dominant position. Strong competition would remain for international routes from carriers like Latam and Copa. On the other hand, should Jetsmart or Latam manage to acquire Viva, it would spell bad news for Avianca, which would continue to face a strong competitor, now financially rejuvenated. Avianca, once known as offering a higher-end passenger experience, now suffers from a dismal reputation with travelers, and a muddled brand that is stuck somewhere between a legacy full-service carrier and a low cost competitor to Viva.

If Avianca’s shareholders are unable to acquire control of Viva, they will have to seriously revamp its brand strategy and determine an identity, because Colombia’s aviation market is becoming intensely competitive. New airlines are entering; we already have spoken of Ultra Air, but other new carriers are coming such as Arajet. Low-cost carrier Wingo is still relatively small, but is wholly owned by Panamá’s Copa, which is financially very healthy and enjoys an excellent market position.

A decision regarding the Avianca-Viva tie up is due soon. Should Aerocivil reject the deal again, expect Avianca shareholders, through Castlesouth to fight it again, conceivably appealing as far as Colombia’s supreme court. Avianca has stated publicly that the acquisition is to save Viva, but there is no doubt that this deal is critical to Avianca’s survival strategy, as Viva has been Avianca’s single biggest competitive threat.

In any case, it is unlikely that Viva will be alone for long, as alternative deep pocketed suitors remain in a holding pattern.

Stay tuned, and be sure to subscribe to Finance Colombia for timely updates and breaking news on this and other important deals relevant to investors and executives active in Colombia.

The offer comes after Colombian government regulators initially rejected a Viva – Avianca merger, but later agreed to reconsider the deal. After the Colombian Ministry of Transportation and its subordinate civil aviation regulatory authority Aerocivil slowed the deal down, low-cost carrier Jetsmart submitted an offer, and now Latam.

“The Colombian subsidiary of the Latam group is prepared and has the capacity to strengthen its operations in the country. In this way, an eventual acquisition of Viva Air Colombia becomes a growth opportunity offering Colombian consumers the best value offer in the local market in terms of service, and the country new alternatives for strengthening its connectivity and the development of tourism,” said Latam in a statement shared with Finance Colombia.

“Latam Airlines Colombia has been operating in the Colombian market for 11 years, and in its trajectory, it has had a constant concern to invest in the Colombian market. For this reason, we believe that this potential operation would be the best option to strengthen the conditions of free competition, as well as to offer the necessary support that will allow us to respond to the financial situation of Viva Air Colombia and its creditors, which will result in the strengthening of the Colombian airline industry.”

Based on passenger volume, Latam is almost eight times as large as Viva, with a route network that extends throughout Latin America, the Caribbean, North America and Europe. This new twist further weakens Avianca’s position in line to purchase Viva, as the Colombian government initially opposed the tie up because the combined company would dominate the Colombian domestic travel market. Avianca, due to a dismal service record, has also garnered plenty of enemies even in Colombian government.

Viva is run by CEO Felix Antelo

Friends and allies

Viva is currently an independent airline, run by former Latam executive Felix Antelo. It was backed by airline venture capitalist Declan Ryan’s Irelandia Aviation. Ryan’s father, aviation legend Tony Ryan established European low cost airline Ryanair, but Declan Ryan is no longer involved in Ryanair, choosing instead to develop low-cost airlines across the globe, including Viva Aerobus in México, Allegiant in the US, Tiger Air in Singapore (now merged with Scoot, a unit of Singapore Airlines), and of course Viva. Viva has no relationship with Ryanair, and is not affiliated with Viva Aerobus in México, but has done some limited codesharing agreements in the past with the latter. Declan Ryan last year joined the board of Avianca after Avianca announced its intention to acquire Viva and form, along with Brazilian airline Gol, a South American airline group called Abra.

Latam is backed by both Delta Airlines and Qatar airways, Delta snatching an alliance with Latam away from American Airlines in 2019. American Airlines now backs Jetsmart with a minority investment, though the two airlines have distinct operating models. American Airlines, like Qatar, Latam and Delta are legacy airlines, while Jetsmart, like Viva, is a low-cost carrier.

In the case of Avianca, United Airlines ended up with a significant stake in the airline after former chairman Germán Efromovich defaulted on a $400 million USD loan collateralized by Efromovich’s shares in Avianca. United Airlines ended up appointing Efromovich’s business nemesis, Roberto Kriete as chairman, a post he still holds.

Viva’s growth in market share over the past several years has come largely at the expense of Avianca, though Viva is quick to point out that with its ultra-low-cost model, it competes as much with the country’s terrestrial bus lines as it does with other airlines.  A merger with Viva would create a competitive fortress in Colombia, especially if the merged airline is not forced to surrender routes or gates at congested Colombian airports such as Bogotá’s El Dorado, or Medellín’s José María Córdova international airport.

On the other hand, a Viva merger with a deep pocketed partner that does not currently have a comprehensive domestic route network—Jetsmart, Latam, or perhaps Copa subsidiary Wingo—would be potentially disastrous  for Avianca; an airline that recently doesn’t seem sure what it wants to be, as the post-bankruptcy legacy carrier more and more mimics Viva’s low-cost, a-la-carte passenger offering. So far, neither Panamá-based Copa nor its Colombian low-cost subsidiary Wingo have expressed interest in Viva.

Expect more of the unexpected as this aviation drama plays out. Will the victorious suitor absorb Viva, or keep it as a separate, subsidiary operation? Will the Colombian government rule in favor of original suitor Avianca? In their original negative ruling, they said that Viva had not sufficiently shopped for savior investors, and that the merger would be anti-competitive and bad for Colombian travelers. Or will regulators rule in favor of Avianca by virtue of it being first in line chronologically?

Be sure to share your own comments and opinion in the comments section below!

Up until the announcement, the airline, which has a codeshare agreement with Colombia’s Viva, flew flights between Medellín and both Cancún and México City.  Airport officials said in a statement that they lament the situation, and hope to welcome Viva Aerobus back one day.

Viva Aerobus said that passengers affected by the move should contact the airline by dialing 01 800 518-9402 (Colombia) or via the web at: https://www/vivaaerobus.com/es-mx/info/sobre-nosotros/contacto .

The new route will be operated with an interline agreement with Mexican air carrier Viva Aerobus. Though Viva and Viva Aerobus are completely separate companies, both were backed by aviation venture capital firm Irelandia Aviation.

“Mexico is a key country in our international expansion plan. Today we are excited to launch this new direct route that will allow us to continue connecting passengers in both Mexico and Colombia with the rest of Latin America. Our interline agreement with Viva Aerobús has been key in the launch of this new Cartagena – Mexico route with which we have already adjusted four direct routes that connect both countries,” said Félix Antelo, CEO of Grupo Viva.

The new Cartagena – Mexico City route:

• Start of operations: Tuesday, May 4.
• Schedule Cartagena – Mexico City: 19:46 – 23:59
  • Weekly frequency: Tuesday – Thursday – Saturday.
• Schedule Mexico City – Cartagena:00:59 – 4:48
  • Weekly frequency: Wednesday – Friday – Sunday.
• Tickets Cartagena – Mexico: from USD 149
• Tickets Mexico -Cartagena: from USD 129

Other Viva routes Between Colombia & Mexico:

• Medellin – Mexico City (Daily Route)
• Medellín Cancun (Daily route).
• Bogotá – Mexico City – Daily codeshare route Viva Aerobús.
• Bogotá – Cancun -Daily route, codeshare Viva Aerobús.
• Cali – Mexico City, starting in March, three weekly frequencies
• Cali – Cancun, from March, three weekly frequencies

Currently, there are 23 international connections from 8 different Colombian cities, reaching a total of 710 flights per week and 126,000 available seats.  41% of that volume is directed to and from the United States, 17.3% to Panama, 11.7% to Mexico and 5.5% to Spain.

During 2021, twelve airlines have announced new routes, with Colombia now ranking within the top 20 global commercial aviation markets, and third place in Latin America, surpassed only by Mexico and Brazil, according to aviation data firm OAG..

Mexican operator Volaris has entered the Colombian market with routes from Mexico City and Cancún. Colombian low-cost carrier Viva is in the midst of an aggressive expansion with new routes to several countries, and new cities in existing national destinations.

The Deputy Minister of Tourism, Ricardo Galindo Bueno, indicated that “the arrival in the country of this airline (Volaris), added to the inauguration of two Spirit flights originating in Miami and arriving in Bogotá and Medellín, allows us to acknowledge a very good job if taking into account that in 2019, until now the most important year for Colombian tourism, a total of 17 new international routes were inaugurated.”

Growth in travel between Colombia and Mexico is continuing to increase, with six airlines now flying between the two countries:  Aeroméxico, Avianca, Viva, Wingo, Viva Aerobus and Volaris. These carriers connect Mexico City and Cancún with Bogotá, Medellín and Cali; reaching 83 flights and 14,769 weekly seats, achieving a recovery of 76% of the seats and 67.5% of the weekly frequencies, compared to February 2020.

Viva (originally Viva Colombia) and Viva Aerobus are completely separate companies with similar names but different owners and independent management. Both share a common heritage in being backed and developed by Low-Cost Aviation pioneer Irelandia Aviation, of RyanAir fame.

The business model of these two airlines allows them to offer passengers economic options – Base Fare from Viva and Zero Fare from Viva Aerobus – and the possibility of customizing the flight by adding the additional services they require, thus paying only for what they need.

“What we are achieving is not only the first interline agreement between two Low-Cost airlines in the region; We are building the region, strengthening our presence in the market and contributing to economic dynamization. The two airlines ensure air inclusion and allow more and more people to have the opportunity to fly more, to more destinations, in this case between Colombia and Mexico,” said Félix Antelo, president and CEO of Viva.

The two airlines operate some of the most modern fleets in America, flying the Airbus A320. On one hand, Viva’s aircraft make up the youngest fleet in Colombia and the third in South America, while the Viva Aerobus fleet is positioned as the youngest in Mexico and the second in North America.

In a second phase of this agreement, both airlines will be able to mutually offer connecting flights that link their route portfolios. In this way, Colombian passengers will be able to access the entire network of Viva Aerobus destinations in Mexico and the United States, and Mexican travelers can take advantage of Viva flights in Colombia and Peru.

“Viva Aerobus has revolutionized the way of traveling by plane in Mexico, and with this agreement with Viva Air we will improve the offer of our flights to Bogotá, with great customer service, and more importantly offering the lowest prices since we operate an ultra-low-cost business model, always taking care of the economy of our passengers,” said Juan Carlos Zuazua, CEO of Viva Aerobus.

Currently, Viva (www.vivair.com) operates 34 national routes in Colombia and Peru and 7 international routes to the United States, Peru and Mexico; while Viva Aerobus (www.vivaaerobus.com) offers more than 112 routes within Mexico and 31 international routes to the United States, Cuba and Colombia.

Below: Viva CEO Felix Antelo discusses the new pact between Colombia’s Viva and Mexico’s Viva Aerobus (in Spanish)

The joint venture will be led by Skyports’ Colombia General Manager, Daniel Salamanca, who brings a track record of drone delivery experience and expertise to the project. Salamanca was also the first to receive approval for beyond visual line of sight (BVLOS) flights in Colombia on the Pacific Coast, where he worked with the national government and the presidency to transport blood samples from rural areas into central hospitals. These drone delivery trials benefited more than 1,200 people and waiting times for laboratory results was reduced by more than 75 percent.

Skyports is backed by Irelandia Aviation, which also is the largest shareholder of Colombia’s Viva Air.

The Skyports medical drone delivery trials will be the first of their kind for Colombia, with flights expected to commence around mid-2022. Drone delivery operations will be launched across remote areas of Colombia including La Guajira and Chocó, with a focus on carrying critical health supplies such as vaccines, pathology samples and HIV tests. The drones to be used on this project are provided by Australian drone company Swoop Aero and can carry up to 5kg as far as 180km in harsh environments such as high altitudes, wind and rain.

The joint venture will build on from Skyports’ successful proof of concept trials which took place earlier this year, where Skyports partnered with the UK’s National Health Service in rural Scotland, transporting COVID-19 test samples, vital PPE and other medical materials by drone between medical facilities in isolated and difficult to reach areas. The successful trials reduced end-to-end delivery time by almost 95 percent – from what would have taken on average 20 hours through conventional delivery methods to just one hour via drone delivery.

“We’re excited about collaborating with Skyports on this joint venture and bringing our heritage in cutting-edge aviation, expertise of working closely with regulators, and market intellect to this partnership. This is just the start of our expansion into wider LATAM and we look forward to announcing more countries soon,” said Declan Ryan, chairman of Irelandia Aviation.

Irelandia, the world’s premier low-cost airline developer brings its deep aviation expertise to the partnership, through its previous ownership of leading airlines Ryanair, Tiger Air, Allegiant and Viva Aerobus. Irelandia’s current airline is Colombia’s second largest international airline Viva Air, based in Medellín. The Irish company has extensive expertise in regulations, flight operations and commercialization, which will be a key asset for this project.

“Colombia is an incredibly exciting market for Skyports and one that is fundamentally important to us. Our drone delivery operations are not just about commercial gains, but also about connecting rural communities with the necessities of life, such as healthcare and logistics. It’s our aim that people receive the same level of healthcare, everywhere in the world, regardless of where they live,” said Duncan Walker, CEO and Founder of Skyports.

The investment, said to be $70 million USD of convertible credit, brings the airline into proximity with both bankrupt Colombian carrier Avianca and Mexican carrier Volaris. Volaris was founded by Roberto Kriete, who previously sold El Salvador-based Grupo Taca to Avianca, but later fell out with then Avianca Chairman Germán Efromovich. After United Airlines took Efromovich’s shares as collateral for a half-billion dollar loan, the US carrier appointed Kriete, and his Caoba allies José Guardian and Rodrigo Salcedo to Avianca’s board of directors.

Caoba is Spanish for Mahogany

Guardian and Salcedo, through Caoba Capital, also have a stake in Kriete’s Volaris. Caoba founder José Guardian previously worked for Roberto Kriete as vice president of finance, treasury, and strategic development for Taca Airlines. Salcedo also served on the board of directors of Volaris.

The deal has caused speculation to take flight on whether there will be any potential tie-ups between Sky Airlines, Avianca, and / or Volaris. Volaris and Sky are both low-cost carriers, but Avianca has a legacy model that would conceivably be harder to integrate. Not only this, Avianca is heavily dependent upon its membership in the Star Alliance, and partnership with United Airlines of the US and Copa Airlines of Panamá.

Caoba Capital, as an investor in Avianca, is well positioned to assemble an alliance involving one or more of the three airlines. In fact, a source told El Mercurio that Caoba will “obviously” seek synergies with Avianca to create a stronger South American network.

All three airlines with ties to Caoba may see their networks under siege, as Colombian low-cost carrier Viva has already begun offering routes into Mexico and filed for permission to begin routes to Chile. Mexico’s unrelated Viva Aerobus has begun Colombia routes, and Avianca’s own Star Alliance Partner Copa’s Wingo subsidiary is cannibalizing Avianca’s home turf alongside Viva.

Volaris seems to be doing well. S&P just this afternoon returned Volaris to its IPC Mexican index, but Sky and Avianca are in much weaker positions facing competition from highly-liquid Copa Airlines and its Wingo subsidiary, and fast-growing Viva, backed by the deep pockets of Cartesian Capital and Irelandia Aviation. Avianca will need to repay the debt-package it is assembling in the hopes of emerging from Chapter 11 bankruptcy in the US court system, and also re-engineer itself to compete in a hotly contested Andean and Central American market that it completely dominated just five years ago.

Felix Antelo is CEO of Viva Air Group, based outside Medellín, Colombia

Unlike Avianca, which appears to be hopeful for a government takeover, privately held Viva Air insists that it is simply seeking temporary liquidity.

“In our particular case, and on this it is very important to emphasize, unlike what may be happening with other airlines in Colombia and the world, we are not asking for or requiring financial subsidies or bailouts; What we are looking to obtain is a bridge loan with a reasonable period of time, which can be between five and six years, and a grace period of between two and three years, given that our problem is only one of liquidity, given that we have more than a month without flying and, as the president recently said, this restriction will most likely extend into June. In this way, we will guarantee the sustainability of the business, the activation of operations once the emergency is over, as well as air inclusion in Colombia,” said Félix Antelo, CEO of the Viva Air Group.

Viva Air is controlled by Irelandia Aviation, the parent company of Ryanair in Europe, Allegiant in the United States, and Viva Aerobus in Mexico.

International carrier Copa Airlines (NYSE:CPA) in neighboring Panamá just closed on a $350 million USD private debt placement paying 4.5%, and due in 2025. Avianca recently restructured a significant amount of its debt in December, paying double the interest at 9%. Still, the money losing airline has defaulted on payments of debt and expenses and says it is on the verge of being unable to pay wages.