Bogotá, Colombia — In a significant shift for Colombia’s aviation industry, flag‑carrier airline Avianca has announced it is abandoning plans to merge with low‑cost carrier Viva Air, citing regulatory conditions that it says would undermine the viability of the deal and risk Avianca’s stability. The decision effectively ends months of uncertainty over the future of the embattled budget airline and reshapes the competitive dynamics of the nation’s skies. Forbes Colombia
The proposed merger — first unveiled in 2022 as a lifeline for financially distressed Viva Air — had been under intense review by Colombia’s civil aviation regulator, Aeronáutica Civil (Aerocivil). Although the authority conditionally approved the deal earlier in 2023, Avianca determined that the stipulations attached to the approval would make integrating Viva’s operations unworkable and potentially harmful to both parties. avianca.com
Why Avianca Walked Away
According to a statement from Avianca, the conditions set by Aerocivil would have forced it to take on routes, commitments and pricing structures that do not align with Viva’s diminished operational capacity after the airline suspended flights earlier in 2023. The merger terms also required Avianca to fulfill obligations linked to passenger refunds and operational guarantees that the company argued were impractical, given how much Viva’s fleet, staff and infrastructure had eroded. AeroTime
Viva Air’s collapse in late February 2023, when it grounded all flights amid financial difficulties, intensified pressure on regulators and potential partners alike. At its peak, Viva had been a crucial player in Colombia’s ultra‑low‑cost segment, operating more than a dozen Airbus aircraft and serving domestic and international routes. But its suspension stranded thousands of passengers and left a gap in the market that Avianca initially hoped to fill through a rescue merger. Wikipedia
“The conditions make Viva’s operation unviable in the medium term,” Avianca said in a written response to Aerocivil’s resolution, according to industry observers. The airline noted that complying with the terms would hinder not only Viva’s revival but also pose a strategic risk to Avianca’s broader business. AeroTime
Regulatory and Market Complications
Aerocivil’s conditional approval had aimed to balance concerns over competition with the need to protect passengers and preserve connectivity. Among the conditions were requirements to honor or refund tickets for canceled Viva Air flights, return key airport slots at Bogotá’s El Dorado International Airport, maintain Viva’s low‑cost service model on certain routes, and ensure fare dynamism on markets where the merged entity would hold dominant share. Forbes Colombia
These regulatory safeguards — designed to prevent monopoly power and protect consumers — ultimately became a sticking point for Avianca, which argued they limited its ability to restructure and relaunch Viva effectively. The airline also pointed to the fact that Viva no longer possessed the same network or workforce it had before suspending operations, complicating any meaningful integration. AeroTime
Analysts note that the prolonged review process frustrated both carriers and contributed to mounting operational challenges for Viva. The airline’s temporary suspension in February led to a loss of aircraft and reduced market presence, further eroding the foundation on which the merger had been pitched as a rescue strategy. Aviation Week
Implications for Colombia’s Aviation Sector
With the merger off the table, Colombia’s aviation landscape faces renewed turbulence. The collapse and restructuring of multiple carriers — including Ultra Air, which also suspended operations — has left gaps in connectivity and raised concerns over competition and pricing on key domestic routes. The City Paper Bogotá
For passengers affected by Viva’s suspension and the failed merger, the outlook remains unsettled. Avianca has taken on responsibility for rebooking many travelers and has touted efforts to transport tens of thousands of stranded passengers across remaining routes. However, the absence of a formal takeover leaves a larger question: who will fill the vacuum in the low‑cost segment that Viva once served? avianca.com
Competitors such as LATAM Airlines, Wingo and JetSmart could potentially capitalize on the gap, while regulators will be under pressure to foster a competitive market without compromising service quality or safety. El País
Looking Ahead
Avianca’s withdrawal from the merger marks a pivotal moment in the country’s aviation history, showcasing the challenges of rescuing an airline amid regulatory scrutiny and post‑pandemic volatility. With Aerocivil’s approach emphasizing competition and consumer protection, the fate of Colombia’s low‑cost aviation sector remains in flux.
For now, industry observers expect heightened competition from existing carriers, potential new entrants, and ongoing debate over how best to ensure affordable and reliable air travel for Colombians — a debate likely to shape policy and business strategy for years to come.
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