The Chilean airline goes through Avianca to acquire 100% of Viva Air

JetSmart, Chilean low-cost airline, announced on Tuesday February 7 that it was interested in acquiring 100% of the shares of live aira Colombian company that is experiencing serious economic difficulties and is about to disappear.

In a statement, the CEO of JetSmart, Stuart Ortizasserted that a transaction between JetSmart and Viva Air will maintain the ultra low cost model in Colombia and with it, continue to offer more routes at lower prices.

“We have a long-term vision for expansion in South America and we are able to continue to invest in our growth. We believe in the potential of the Colombian market. Our alternative will benefit users, strengthen free competition in the sector and promote tourism and connectivity in the country,” Ortíz explained in a statement.

In the document, JetSmart indicated that the planes used by the company reduce fuel consumption by more than 25% per seat compared to the previous generation. Similarly, it records a 25% reduction in emissions of carbon dioxide (CO2)Consequently, they stop emitting more than 12,000 tons of matter per plane per year.

Furthermore, it was noted that the alliance is sought after because the airlines do not have common routes in Colombia and they both operate new fleets of Airbus A320neo.

“At JetSmart, we have the experience, capabilities and resources to successfully complete this transaction and we look forward to moving forward quickly and efficiently,” said the executive director of JetSmart, an airline that is part of the airline portfolio of Indigo Partners, a fund investment company that controls five other airlines and currently operates 79 routes in seven South American countries and Colombia, where it has operated since late 2019, with connections to Bogotá, Cali and Medellín.

The communication from the Chilean airline came after the executive director of Viva Air, Felix Antelosaid Radio Blue that the only option for salvation was to merge with Avianca, because so far (the morning of February 7) no other alternative has appeared, despite the fact that the company has been looking for it. He underlined that in the event of failure of the integration, it will be up to the shareholder to define the Plan B to the company.

It must be remembered that Avianca and Viva Air They asked for the merger. However, the Civil Aeronautics (Aerocivil) replied that said union will not take place to avoid scenarios of monopoly and unfair competition in some cities.

The aviation authority also concluded that allowing this the integration “presents risks to competition in the sector and the welfare of consumers.” He gave several arguments to prevent this union. For example, he pointed out that the fusion would strengthen the market power of Avianca, Viva Air and Viva Peru.

“Stakeholders participate in 59 national routes, which handle 93.7% of the country’s domestic traffic. Among these routes, in 29 domestic round-trip routes, they participate coincidentally,” Aerocivil said.

Worse still, depending on the entity, if the merger is permitted, that merged company would be the only option for consumers to sixteen national roads.

If this merger were authorized, a retreat more than seven years in terms of free competition and new entrepreneurs “would face new difficulties in expanding or entering markets affected by higher barriers to entry and greater market power”.

Viva, which has been described as a “valuable alternative for Colombian and regional consumers”, has previously mentioned that it is in crisis and could disappear if the merger does not take place. Faced with this eventuality, Aerocivil affirms that this situation should be tested so they can make an exception.