Avianca, Viva Offer Network Concessions In Effort To Secure Merger Approval

Colombian airlines Avianca and Viva have offered a series of concessions to the country’s aviation regulator in a bid to push through their planned merger, including surrendering some routes to competitors.

Aerocivil rejected the proposed deal earlier in November, saying that the tie-up would damage competition and create a monopoly on 16 domestic services.

The regulator said that the integration of the two carriers—alongside Viva’s Peruvian subsidiary—represented “risks for competition in the sector and the welfare of consumers,” as well as presenting “new difficulties” for other airlines in growing or entering markets.

In the airlines’ appeal they have proposed five potential resolutions to address the regulator’s concerns. The plans include returning a “relevant percentage of slots” at Bogota’s El Dorado International (BOG) to allow competitors to grow from the congested airport.

The businesses have also pledged to maintain Viva’s brand and ULCC model and protect fares on some routes, as well as maintaining Viva’s existing interline agreements.

In addition, they vowed to offer codeshares or interline agreements with state-owned domestic operator Satena on routes where there is a monopoly, saying the move would help to make “isolated territories of the country more competitive.”

“We are open and willing to continue building the history of Colombia and contribute to strengthening the air market so that the country is increasingly more and better connected,” Avianca President and CEO Adrian Neuhauser says.

“For this reason, we put different alternatives on the table so that the authority can study them in light of protecting the largest number of formal jobs; maintain the regional connectivity that Viva offers; as well as your brand and what makes it special.”

In a statement, Avianca says it believes the proposed remedies would protect passengers, safeguard jobs and promote connectivity by giving Colombians more access to air transport.

However, the flag carrier says that if Aerocivil “makes it impossible” to rescue Viva, that it “will do everything possible” to meet the needs of the country in the face of the possible disappearance of a competitor.

Avianca announced plans to acquire the ULCC in April but planned to keep the two carriers separate. However, in August the airlines requested expedited antitrust approval from Aerocivil for a full merger, saying the integration was vital due to Viva’s “delicate financial situation.”

The merger is independent of Avianca’s efforts to create a new holding company named Abra Group, which would be a competitor to the pan-South American LATAM Airlines Group. Providing it wins regulatory approvals, Abra will also include Brazilian carrier GOL Linhas Aereas and Viva, as well as having a minority stake in Chile’s Sky Airline.