During the night of Tuesday, March 21, the Civil Aeronautics of Colombia (Aerocivil) confirmed, through an official statement, that the integration of the low-cost airline Viva Air with Avianca was authorized under certain conditions.
Regarding the request for pre-assessment of a business integration submitted by Avianca S.A., Viva Air and Viva Air Peru, the Civil Aeronautics reports:
On 4 November 2022, the Civil Aeronautics, in accordance with the preceding procedures, objected to the request for integration in the terms it was presented on the grounds that it was contrary to free competition and that the condition of company in crisis had not been proven.
On 18 January 2023, by resolution 00079 of the Secretariat of the Aeronautical Authority of this Entity, it was ordered to redo the administrative action and establish as the procedure for this type of request, the one enshrined in Law 1340 of 2009 and concordant rules in accordance with the rules of consumer protection.
The intervening companies, in the framework of the new procedure, submitted a «final offer» of remedies to mitigate the underlying anti-competitive effects of the planned transaction, which were subject to analysis.
The Directorate of Air Transport and Aerocommercial Affairs of this Entity conducted a detailed and technical study of the request submitted and, in turn, of the remedies submitted, to assess the viability of the request, finding that the proposed remedies failed to mitigate the effects of concentration, dominance and asymmetry arising from the transaction.
The Directorate made a balance between the situation generated by the suspension of VIVA’s operations, its operational condition and the crisis that materialised in February, as well as the possibility of authorising the integration by imposing a set of remedies that, from the competition point of view, would mitigate the effects that could be generated by the transaction on current market players and potential entrants.
As a consequence of the above, it was decided to authorise the merger, subject to compliance with various structural and behavioural remedies that guarantee, among other things:
That the rights of VIVA users are respected, that tickets for cancelled flights are reimbursed and that those with outstanding tickets are allowed to fly. In any case, they should respond to VIVA passengers affected by the company’s unilateral decisions to cease operations.
The return of the slots that imply aggravating the situation of concentration in the most demanded slots (prime) for both the Summer and Winter seasons, both in departures and arrivals, with the purpose of not increasing the entry barriers that access to the infrastructure of El Dorado Airport generates for this market.
Maintain VIVA’s low cost scheme as an air transport option that offers options to air service users.
The return of frequencies on the Bogotá – Buenos Aires route, which is particularly impacted.
Maintain an effective fare cap on routes where the integrated entity retains 100%.
To guarantee dynamism on the routes subject to greater concentration.
Appeals for reconsideration and appeals may be lodged against this decision.