Low-cost airline Viva Air suspends flights amid regulatory deadlock

Photo: Viva Air

Colombian budget carrier Viva Air, which filed for bankruptcy in early February while canceling several routes, announced the suspension of its operations on Tuesday. The company attributed the decision to the delay of Aerocivil (Colombia’s national civil aviation agency) in approving its incorporation by the country’s flagship airline Avianca.

For months the company had warned the agency of the risk of stopping operations on account of debts amounting to over COP 4 billion (USD 839 million) — of which Viva Air’s agreement with Avianca would have covered not even a quarter.

After rejecting the Viva Air-Avianca deal, announced in April of last year, because it saw high risks of concentration in the sector, Aerocivil recently recognized the interest of two other competitors in Viva Air: ultra-low-cost airline JetSmart, controlled by the U.S.-based investment fund Indigo Partners, and the Chilean group Latam. They both showed an interest in Viva Air in February.

Avianca and other regional airlines had to mobilize to assist thousands of passengers affected by the suspension of Viva Air flights in Colombia and Peru, where the company also operates.

The Brazilian market is following the case closely since Gol and Avianca’s new holding Abra would also control Viva Air if Avianca convinces Aerocivil to greenlight the deal. Currently, Avianca shareholders own 100 percent of Viva Air’s economic rights but do not control the airline.

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.