Colombia to Again Review Proposed Avianca-Viva Tie-up

Originally published on Airways

Colombia’s civil aviation authority, Aerocivil, has announced that it will review the proposed merger between Avianca (AV) and Viva Air (VH).

Previously, Colombia’s Aerocivil rejected the proposed merger, but the agency announced that it would restart a review of the merger without making either party reapply for approval of the merger. 

On January 18, Aerocivil stated “the existence of a substantial irregularity in the processing of the administrative action in the first instance.” Thus, the review will be reviewed by Columbia’s Director of Air Transport for further review. In November 2022, the Colombian regulator declined the planned merger, claiming it would be a setback for competition in the aviation market. 

When the ruling came out in November, AV came out against it, with Avianca’s CEO, Adrian Neuhauser, saying it was against Colombia’s needs.

Aerocivil has stated that there were errors in the review process and that it will make a new decision promptly. On Thursday, the director of the aviation regulator, Sergio Paris, stated that the review process would be restarted promptly and a special team would be formed.

The arrival of the VH’s first A320neo signaled a new livery and branding for Viva Air in 2021. Photo: Viva Air

Background

Back in April 2022, AV and VH agreed on a deal for a merger. In the agreement, the airlines will be unified under the same group with their economic assets but will keep their separate brands. According to the airlines, the merger would help the airlines’ financial stability post-pandemic.

Then, AV requested accelerated approval for the merger. However, the regulators had concerns about VH’s ability to compete with more financial pressure. 

The regulators’ November 8 ruling said that AV and VH together account for 94% of Columbia’s domestic traffic with 59 domestic routes. This also included 16 routes where there was no competition. Additionally, the ruling stated that VH would not be an independent airline, blocking other carriers under the holding company. 

Avianca committed that it “reaffirms its willingness to fully participate in this effort, which will protect Viva’s brand, network, and low-cost business model.”

Avianca, which is the flag carrier of Columbia, has 101 aircraft in its fleet. They serve 63 destinations across North America, South America, and Europe. Viva Air operates 19 aircraft to 26 destinations across North and South America.