Colombia’s ultra-low-cost carrier Viva Air may not survive much longer. The airline is –according to recent reports– days away from formally ceasing operations as it painfully awaits the government approval of its merger with Avianca.
Losing ground by the minute
In a statement released by Avianca on Monday, the airline said that the financial crisis of Viva Air is more visible than ever. Since the two companies presented the Colombian authorities with their plan to merge seven months ago, several developments have taken place, putting into context Viva’s current complex situation.
In a matter of weeks, Viva Air has lost a third of its Airbus A320-family-based fleet. It has also canceled routes in key destinations such as San Andrés, Leticia, Cali, Medellín, and Cartagena, leaving passengers stranded. Additionally, many people have left the company, including the airline’s CEO, Félix Antelo.
On Monday, the Colombian newspaper El Colombiano reported that Viva’s debts were as much as 4.06 billion pesos (about US$831 million). This amount has left the airline board with no choice but to prepare a seemingly unstoppable cease of operations. If it were to take place, Viva Colombia and Viva Peru would be the fourth and fifth airlines to fold this year, after Flybe, Flyr, and Aeromar. Am I missing any other?
These two companies would join an ever-growing list of airlines ceasing operations in Latin America since the COVID-19 pandemic broke out. In the last few years, we have said goodbye to Interjet, TAME, Itapemirim Transportes Aéreos, LATAM Argentina, Avianca Peru, and Aeromar.
No response from the government
Despite the Colombian government saying a few weeks ago it would speed up the reviewing process of the merger between Viva and Avianca, both companies are still waiting for a final response.
On Monday, Castlesouth Limited, holder of the voting rights over Viva Air, said that the Colombian government has chosen to recognize the interests of several foreign airlines over the interests of Colombia’s Viva Air. Castlesouth Limited added,
“As has been stated countless times since the beginning of this process, an immediate decision by Aerocivil allowing Viva to become part of a larger, stronger, and better-capitalized airline group is the only way Viva can continue to fly.
If Aerocivil does not act and Viva disappears from the market, the Colombian government will have privileged the interests of airlines managed from Argentina, Chile, Panama, and the United States over those of Viva itself.
We want to be clear, the Aerocivil has all the elements, including a wide range of conditions offered, to make a decision right now.”
In a statement, Avianca said on Monday,
“Once again, Avianca reiterates its total willingness to seek, together with the National Government, viable and urgent alternatives that facilitate objective scenarios to be part of the solution. At risk are the low-cost model in Colombia, thousands of jobs, hundreds of thousands of airline tickets, a dynamic aeronautical market, the benefits for communities through direct and indirect related services, the democratization of tourism, the loss of substantial public resources due to debts of close to US$ 20 million that the Colombian State has guaranteed to Viva and, most importantly, the continuation of connecting regions that see in aviation a hope for development and social welfare.”
What happens next?
At this point, Viva Colombia and Viva Peru will most likely cease operations shortly. Their disappearance would open up a significant gap in the Colombian market. Low-cost airlines such as Ultra Air and Wingo, but also other companies such as LATAM and even Avianca would be able to take advantage of it, just like Viva Aerobus and Volaris took advantage of Interjet’s demise in Mexico.
Daniel Martínez Garbuno is a Mexican journalist. He has specialized in the air industry working mainly for A21, a Mexican media outlet focused entirely on the aviation world. He has also published on other sites like Simple Flying, Roads & Kingdoms, Proceso, El Economista, Buzos de la Noticia, Contenido, and Notimex.
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