Colombia approves Avianca-Viva Air merger

The Civil Aviation Authority of Colombia (Aeronáutica Civil de Colombia, Aerocivil) has approved the merger between Avianca and Viva Air following a saga that has lasted months and included Viva Air suspending its operations.

While Avianca and Viva Air announced their intentions to merge on August 8, 2022, Aerocivil had initially rejected the proposal, citing competition concerns on November 8, 2022. However, the authority made a U-turn on its decision, stating that there was “substantial irregularity in the processing of the administrative action” and that it will look into the merger request once again.

Before Aerocivil could communicate a final decision to the companies, Viva Air entered a restructuring process, Business Recovery Process (Proceso de Recuperación Empresarial, PRE), on February 10, 2023. Two weeks later, on February 27, 2023, the Colombian low-cost carrier stated that the delays regarding the merger decision had forced Viva Air to announce, “the suspension of its operations with immediate effect”.

On March 21, 2023, Aerocivil announced that it will approve the merger if Avianca and Viva Air will do the following:

Ensure that the customers’ rights of Viva Air are respected and that the passengers’ canceled flight tickets will either be refunded or honored by the new entity
Return the most in-demand slots at El Dorado International Airport (BOG) in Bogota, Colombia to the pool for both the Summer and Winter scheduling seasons
Maintain Viva Air’s low-cost offering to customers in Colombia
The return of flights between Bogota, Colombia, and Buenos Aires, Argentina
Maintain an effective fare cap on routes where the new entity is the only operator
Guarantee a dynamic market where the entity will control the majority of the market share
Previously, Avianca and Viva Air offered to relieve up to 105 slots at BOG, establish a codeshare agreement with SATENA, a domestic airline owned by the Colombian Air Force (FAC), and maintain Viva Air’s low-cost business model. Aerocivil reiterated in its latest announcement that these measures “did not manage to mitigate the effects of concentration, dominance, and asymmetry derived from the transaction”.