Skift Travel News Blog

The Avianca and Viva Air merger has hit a major roadblock with Colombian authorities objecting to the proposed combination. The move could be a blow to Avianca’s plan to create a pan-South American airline group with Brazil’s Gol.

Colombia’s Civil Aeronautics Authority, or Aerocivil, said Tuesday that the merger of the country’s first and third largest airlines could reduce competition and hurt consumers. It could also increase the barriers faced by competitors in the market. In addition, Aerocivil said the financial situation at Viva Air, which the airline’s claimed required expedited approval of the merger, was not so bad as to “affect its viability in the market.”

“We are concerned about the direction of the decision, as it … ignores the potential effect that the disappearance of Viva would have on users and the market,” Avianca CEO Adrian Neuhauser said in a statement on the decision. “At Avianca, we reiterate our willingness to actively participate in rescuing Viva.”

Avianca first announced plans to acquire Viva Air, but not merge with it, in April. However, in August the airlines requested expedited antitrust approval from Aerocivil for a merger that was “vital for the sustainability and development” of Viva Air. In an October interview, Viva Air CEO Felix Antelo said the airlines planned to continue operate as separate brands but would coordinate schedules and fares in order to offer travelers better flight options.

“It will provide for us a financial muscle way stronger and better than what we had before,” he said. “We are going to keep the [low-cost] model around, we’re going to keep the brand around, [and] we’re going to keep the low fares around.”

Antelo also said that “staying independent in aviation in the 2020s is not an option.”

The Avianca-Viva Air merger is the first step in the creation of Abra, a new South American airline holding company created by the merger of Avianca and Gol. The group also has the option to take at least a 42 percent stake in Chile’s Sky Airline.

Aerocivil said it would reconsider the deal if Avianca and Viva resubmit their merger application and offer “remedies” to boost competition.

Updated with comment from Avianca CEO Adrian Neuhauser

Colombian budget airline Viva Air has officially applied to regulators to become part of Abra, the new airline group being formed by the merger of Avianca and Gol.

Under plans unveiled in May, Viva would become one of four airlines in Abra if its joint application with Avianca to Colombia’s civil aviation regulator, Aerocivil, Monday is approved. Avianca and Viva announced plans to combine but continue to operate separately shortly before the Abra deal.

Abra aims to become a multinational South American airline group akin to International Airlines Group or the Lufthansa Group in Europe. The four-way merger would create a regional competitor Latam Airlines Group, which is the largest in South America. Recently restructured Avianca and Gol in Brazil will be the anchor airlines of Abra and joined by Viva, as well as a minority stake in Chilean discounter Sky Airline. Together, the carriers would have significant shares in the Brazil, Chile, Colombia, Costa Rica, El Salvador, and Peru markets.

“The rapid approval of this integration and therefore the incorporation of Viva into Grupo Abra is vital for the sustainability and development of our company in the future,” Grupo Viva CEO Félix Antelo said in a statement translated with Google Translate.

Antelo did not mention a timeline but asked Aerocivil for a “prompt” decision. The application comes a day after Colombia’s new leftist president, Gustavo Petro, was sworn in to office.