• Avianca Boeing 787-8 Dreamliner N792AV (2)

    Avianca

    IATA/ICAO Code:
    AV/AVA

    Airline Type:
    Full Service Carrier

    Hub(s):
    El Dorado International Airport, El Salvador International Airport

    Year Founded:
    1919

    Alliance:
    Star Alliance

    Airline Group:
    Avianca Group

    CEO:
    Adrian Neuhauser

    Country:
    Colombia

Avianca and Viva have offered a five-point plan to Colombia’s civil aviation authorities (Aerocivil), including the return of up to 105 slots at Bogota El Dorado International Airport (BOG) to get the approval of their merger. Earlier this month, Aerocivil rejected their proposal to merge, saying that it represented a risk to the competition and well-being of the consumers.

A new plan

On Wednesday, Avianca and Viva filed an appeal before Aerocivil and proposed five points that address the authority’s concerns. They are proposing to reduce their participation at El Dorado; maintain the Viva brand and its model; protect fares on certain routes, and even offer a new codeshare agreement with Colombia’s State carrier, Satena. Adrian Neuhauser, president and CEO of Avianca, commented,

“We are open and willing to contribute to strengthening Colombia’s air market, so the country is increasingly better connected. For this reason, we put different alternatives on the table so that the authorities can study them in light of protecting the greatest number of formal jobs, maintaining the regional connectivity offered by Viva and its brand.”

A Viva aircraft

Photo: Getty Images.

The five points

These are the five points both carriers proposed to Aerocivil to gain their approval:

  1. Decrease of participation at Bogota’s El Dorado. Return a relevant percentage of slots to Colombia’s authorities and cede slots to competitors with the objective that other airlines may, if they so wish, grow their operations in Colombia’s main airport. Richard Galindo, Avianca’s Chief Legal Officer, said they offered between 73 and 105 slots at Bogota, which would be about 40 to 60% of Viva’s current operation in El Dorado.
  2. Maintain the brand and low-cost model of Viva, preserving as many jobs as possible, retaining its fleet, and operation of the routes on which Viva flies exclusively.
  3. Protect the fares on the three routes where both airlines operate exclusively. Avianca claims only three routes are affected in this way, but Aerocivil claims the merger would give the combined entity a monopoly on 16 domestic routes.
  4. Avianca and Viva offered a codeshare or interline agreement with Satena – Colombia’s State carrier – on routes where Satena is the only operator, strengthening the social role of this company “in making the country’s isolated territories more competitive.”
  5. Keeping Viva’s interline agreements.
An Avianca aircraft.

Photo: Getty Images.

What would happen if Colombia rejects the merger again?

When Avianca and Viva first filed to merge earlier this year, they urged the Colombian civil aviation authorities to approve it, saying a quick approval would help Viva survive. According to both companies, Viva – an ultra-low-cost carrier launched in 2012 – faced financial challenges from the COVID-19 pandemic and the increased cost of aviation fuel.

If the Colombian authorities were to reject the merger again, both companies have the option of filing for their union a second time, according to Richard Galindo. Even with this, he added that this process would take at least four months and most likely be too late to save Viva. Therefore, Avianca is urging the authorities again to review the amended first proposal expeditiously.

Meanwhile, Viva said that allowing it to have the financial backup of a new shareholder would help the airline face the complex economic environment, keep on carrying passengers throughout Colombia (40 million passengers in the past ten years), and allow it to keep the low-cost model.

Do you think the merger should be allowed with the latest amendments? Let us know in the comments below.

Source: simpleflying.com

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