End of the soap opera: Colombia authorized the merger of Avianca and Viva, albeit with conditions
After months of refusals and surprisingly suspended flights of the ‘low-cost’ company, the Colombian Government finally authorized the merger of Avianca and Viva Air airlines.
In any case, Aerocivil imposed several conditions to ensure no abuse of fares or concentration of frequencies.
Colombia’s civil aviation regulator, Aerocivil, authorized the integration of Avianca and Viva Air after re-evaluating the effects of suspending Viva’s operations.
Viva Air warned that it was in a financial crisis and suspended flights unexpectedly in February, affecting hundreds of Colombian and foreign users.
Furthermore, at that time, the Colombian authority considered that the crisis claimed by Viva Air was not proven.
After Viva Air suspended its operations, the Colombian Government made a new technical study of the request, incorporating certain conditions to “mitigate the anticompetitive effects”.
The priority for Aerocivil is that the rights of Viva’s users are respected, reimbursing the canceled flights and allowing those with pending tickets to travel.
The conditions also cover fares since Aerocivil demands that the merger maintains “Viva’s low-cost scheme” so that users can choose air transportation.
The authority intends that the companies limit their fares in those routes where they will not have competition.
In addition, the agency aims to return slots – permits for air operations – that imply the concentration of flights in the most demanded slots.
It also requests the return of frequencies on the Bogota-Buenos Aires route, which is “particularly impacted” by the merger.
In this sense, it is also required to guarantee the dynamism of the routes.
A DIFFICULT INTEGRATION
The approval of the integration of the companies comes amid an investigation by the Superintendence of Industry and Commerce into both airlines, which allegedly had begun to operate together without having received authorization from Aerocivil.
According to Bloomberg, Avianca acquired the economic rights of Viva Air and Viva Peru without prior authorization, which meant the beginning of a business integration that would have restricted free competition.
The airlines’ majority shareholders reported the acquisition of Viva’s economic rights only in April 2022, but Aerocivil did not request the permits until August.
Amid this process, control of Viva remained in the hands of the Superintendence of Transportation.
At the same time, an investigation continues into a complaint against the company for fraud because it continued to sell tickets in the knowledge that its operations had been suspended.
With information from Sputnik
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