Aviation: Viva Air suspends operations, including in Brazil – 02/28/2023 – Market

Viva Air, a low-cost Colombian airline, suspended all operations on Monday night (27) due to financial problems, according to a company statement. There is no expected return.

As a result, its flights were cancelled, including routes from Colombia to Buenos Aires and São Paulo. Viva operates 35 routes, with a fleet of 20 aircraft, and has a subsidiary in Peru.

“We regret to inform the temporary suspension of our operations given the lack of timely definition of the [autoridade de] Civil Aeronautics on the alliance between Viva and Avianca, the only possibility to continue flying and fulfill our commitments”, said Viva, in a statement.

“We inform passengers with current flights with Viva that we will not be able to honor their travel plans now. We will inform you in due course of the steps to follow after this decision”, continues the note.

The company also pledged to work to “preserve its ability to restart operations at a future date, assuming Civil Aeronautics immediately approves the pending alliance.”

The situation has generated scenes of confusion at Colombian airports in recent hours, with long queues and crowds of passengers in search of information. Many people arrived to travel and found out only at the airport that they would not be able to board.

In Bogotá, many travelers spent the night at the airport after having their flights cancelled. At dawn, a group of them protested and blocked access to international boarding.

This Tuesday morning (28), the Civil Aeronautics said that the companies Latam, Avianca and Satena will serve passengers who had flights scheduled until Wednesday (1st) with Viva, at no extra cost. The rescheduling is being done directly at the airports, according to the Colombian newspaper El Tiempo.

Since April 2022, Viva has been seeking government approval for its integration with Avianca —Colombia’s largest airline— claiming that it is the only way to overcome its financial problems. With the pandemic, airlines suffered huge losses with the suspension of flights.

In early 2022, Viva and Avianca reached an agreement to unify their economic rights, but without changes in the management and operation of the companies. That is: the same owner would receive the profits of the two companies, but their management would be done separately.

However, months later, Avianca said that Viva’s financial situation was in danger and proposed to unify part of the operations to cut costs and be able to invest in the company.

The Colombian government saw a risk to competition and opened a process to analyze whether to authorize the integration. With the merger, the same company would dominate a very large portion of the country’s market. Thus, several routes could be left without competition in practice.

In an attempt to obtain clearance, the companies undertook to give up slots at Bogotá’s airport, the country’s main airport, and to keep both brands active, with Viva continuing as a low-cost company.

After months of debates, in January, the Civil Aeronautics annulled the case because it found a “substantial irregularity in the administrative process”. As a result, the process had to start over from scratch.

On the second (27th), Civil Aeronautics recognized that Viva’s case is of interest to third parties, which opens up space for other companies to have their proposals analyzed. In practice, this will further delay the merger analysis process between Viva and Avianca.

Viva says that the government’s lack of definition makes creditors refuse to renegotiate the company’s debts, which has been in judicial recovery since the beginning of February.