The Colombian flag carrier, Avianca, issued a statement last Monday in which it denies the merger with the Chilean SKY Airline. This announcement was sent by Avianca to the Financial Superintendence of Colombia.
«Avianca is unaware of the existence of any investment by its financiers in SKY Airline, as well as the terms and conditions of any negotiation that any of the Tranche B financiers may have carried out with SKY Airline or its shareholders,» the Colombian carrier stated.
The statement also specifies that once Avianca finishes its Chapter 11 process, the new shareholders can make decisions in their capacity as owners. Though the statement is clear on the denial, this particular mention can be interpreted as a «hands-off» position on any possible ongoing negotiation between debtors.
This October 26 will be the hearing in which Avianca will seek approval of its reorganization plan, and it would not be a surprise if the merger is confirmed after this legal procedure.
Due to Avianca’s current delicate situation, the idea of its merger with SKY Airline was encouraging for Avianca’s purposes of positioning itself as one of the leading carriers in Latin America.
This new Avianca Low-Cost was the confirmation of the current situation of Avianca, since its current operation is more low-cost than traditional.
The New Avianca Low-Cost
In the last months, it seems that Avianca intends to continue being a company that competes with the large international airlines, but simultaneously with low-cost carriers.
Everything seems to indicate that Avianca is changing its traditional operating model for the low-cost model. Apparently now, Avianca is destined to become a low-cost airline, likely abandoning the idea of competing with high-level airlines in Latin America.
To achieve the low-cost objective, the company has drastically reduced its expenses, with the obvious deterioration in service.
As an example, the route between Cali and New York is operated with an Airbus A320 aircraft that has capacity for 150 passengers. A 6-hour flight is operated by a small aircraft, which is usually used for short flights.
For long flights, such as from Bogotá to Washington or Mexico, the Colombian carrier intends to use short route aircraft with uncomfortable seats that recline a maximum of a few centimeters.
In this new “Avianca low-cost,” the Colombian airline is leaving in the background the quality of service, comfort and modernity of its aircraft that it had become known for throughout the continent, thus prioritizing prices, which would be cheaper.
Recently, Avianca announced that its domestic flights in Colombia will now operate with a single cabin, which will have different seat configurations.
The airline indicated that this change constitutes an advance with the process of implementing the new business vision to be an airline where everyone can fly.
In order to have a simpler offer to fly within Colombia, the company will market a simpler fare scheme of four sizes — XS, S, M and L — for flights to as of Oct. 20, which allow the passenger to purchase other services in addition to the predetermined attributes of each fare, including the seat.
In addition, the Colombian carrier will complete the process of total reconfiguration of the cabins of its aircraft in 2022, in which different types of seats will be available to passengers who will be able to access one or the other depending on their need and preference.
