Colombia: Aerocivil approves Viva – Avianca integration, with conditions

Finally, and after months of process, the Colombian aeronautical authority –Aerocivil– approved the integration request of Viva and Avianca, which would allow the Low Cost to keep jobs and resume its flights.

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See also: Viva suspends operations

Although the conditions under which Viva is receiving confirmation of approval are not the best or what was expected when the application was filed, the move will have an impact on all Colombian commercial aviation.

The company had indicated that it was continuing to negotiate with its creditors despite the cessation of operations, and Avianca‘s cash flow could allow the return of Viva‘s regular flights in the short term.

This measure will bring relief to the passengers affected by its closure, which had been estimated at half a million, and to the operators that enabled special flights and seats free of charge.

The aeronautical authority, however, did not grant approval without conditions: as expected, it had to meet the demands of the operators that submitted comments to ensure that the integration does not generate interference in competition.

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Therefore, Aerocivil imposed that Viva-Avianca return frequencies on the Bogotá-Buenos Aires route, operating slots to be released at the Colombian capital’s airport, Viva tickets purchased to be honored, Viva’s low-cost scheme to be maintained and that a fare limit be established on routes where the integrated company has an effective operating monopoly.

With Viva out of the market, will Avianca pursue the integration plan?

The question, however, remains: does it make sense for Avianca to inject capital into Viva and integrate it, or will it prefer to wait for its definitive collapse and acquire -if it can and wants to- the assets that retain value at liquidation price?

The answer does not seem simple: although Avianca has always maintained that the only solution for Viva was integration -although there are industry players who openly state that Avianca already controlled Viva since 2022-, letting the company die will allow it to keep airport slots that it had agreed to relinquish to take control of the low-cost carrier.

Today it could keep those coveted operating slots and routes it was willing to sacrifice because there is no airline to save, in the reality of daily operations. On Monday, March 13, JetSMART CEO Estuardo Ortiz said that the South American holding company, which is part of Indigo Partners, had abandoned its intention to buy it.

See Also: Avianca or Liquidation: VIVA Deal is Almost Impossible, JetSMART CEO Says

Therefore, Viva‘s future is still uncertain: it remains to be seen how the market reacts to the approval and what are the next steps of the low-cost carrier in Colombia.