• 

  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

  Region:

  South America

Avianca’s CEO, Adrián Neuhauser, has rejected the idea that a merger with the ultra-low-cost carrier Viva Colombia would create a monopoly in Colombia, impacting the local air travel industry. Instead, he argued that Ultra Air is looking to oppose the partnership because that would lead to Viva’s ceasing operations.

Not a monopoly?

Avianca and Viva Colombia recently urged the Colombian authorities to approve their proposed partnership. Both airlines said the merger was critical to making Viva viable, as the low-cost carrier faces “a complex financial situation that requires immediate intervention.”

Shortly after, Ultra Air, a Colombian low-cost carrier that launched flights earlier this year, opposed the merger. Its CEO, William Shaw, said joining Avianca and Viva under one holding would create a monopoly with an extremely powerful player. He argued that this would only impact the Colombian travel industry, raising fares for travelers, and asking the local authorities not to approve the partnership. Colombia’s Civil Aviation Authority (Aerocivil) has not yet announced its decision, although other countries, such as Ecuador, seem to be in favor of Avianca, Viva, and GOL’s Abra Group Limited.

This week, Adrian Neuhauser said to the Colombian newspaper El Tiempo that a partnership between Avianca and Viva Colombia would not create a monopoly. Instead, if the association is approved, it would only have about 60% of the Colombian market share, which is about the same percentage Avianca had prior to the COVID-19 pandemic. Due to the crisis, Avianca’s Chapter 11, and the rise of the low-cost model in the country, including Viva’s operational solid performance, Avianca has lost ground in this country.

There are about 6,131 domestic weekly flights in Colombia every week, according to data by Cirium. Avianca operates 33% of these services, followed by LATAM (21%), Easyfly (17%), and Viva Colombia (15%).

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Letting Viva die?

If the partnership between Avianca and Viva is not approved, the low-cost carrier could face a dire situation. Viva’s CEO, Félix Antelo, has said recently that the “quick approval of this merger, allowing the incorporation of Viva to the Abra Group, is key for the sustainability and development of our company in the future.” Avianca argued that the Colombian authorities should approve the integration with Viva under the legal figure of “company in crisis.”

Adrián Neuhauser added that Ultra Air is opposing the merger of the two airlines for selfish reasons. If Viva disappears, who benefits from that scenario, he said. Neuhauser added,

“Accusing Avianca of trying to be monopolistic, I think, is diverting the discussion from what is really trying to happen, and that is that low-cost competitors are trying to take advantage of the opportunity to let Viva die.”

Avianca, Viva Colombia, Viva Peru, and GOL are looking to launch the Abra Group Limited, a holding similar to the International Airlines Group, Lufthansa Group, or Air France-KLM in Europe. It would keep each of their identities separate but under the same leadership, allowing them to grow in a post-COVID environment. Abra Group would also have a 10% ownership of Chile’s Sky Airline. The holding is currently under scrutiny by authorities in the Americas.

Do you think the Colombian authorities should approve the holding between Avianca and Viva? Let us know in the comments below.

Source: El Tiempo.