Partnerships for the Future

Throughout history, the different actors in our industry have understood that the word synergy is almost as important as the word competition. Year after year, aviation has had to remain not only at the forefront of technology but has also had to adopt the best practices of cooperation, which translates into joint efforts to enhance the offering for travelers.

Time is still ticking, and the global outlook is becoming increasingly uncertain. The world’s airlines are going through complex times due to macroeconomic variables, such as the record-high price of fuel, the devaluation of local currencies against the dollar, and very high inflation — factors that affect operations and represent a risk for the industry in general.

That's why, in aviation, staying independent isn't a realistic option. Alliances in the airline industry, particularly in adverse circumstances such as those we have experienced in recent years, have proven to be beneficial for passengers and the market in gen}eral.

Europe has always been a reference, so it is pertinent to present success cases like the IAG (International Airlines Group) conglomerate, a holding company composed of several airlines of the stature of Iberia, British Airways and Vueling, which even as they maintain independent brands and operations, they benefit from the synergies and scales that derive from belonging to a larger team.

We don’t have to look far for our own cases as, at this very moment, Mexico’s Viva Aerobus and U.S.-based Allegiant Air, both with a low-cost model, have submitted an alliance request to their respective regulatory entities to seek improvements in terms of service, creation of new routes that connect both countries and the ability to develop plans that allow them to deliver new benefits in the first quarter of 2023. Similar is the case of the already announced and approved alliance between Latam and Delta, where both airlines can agree on itineraries, prices, and schedules.

A macroeconomic moment like the one we are experiencing presents us with great challenges that Viva is facing thanks to the benefits of the “Ultra Low Cost” model, which includes cost efficiencies and flexibility in the adjustment of routes or company size, while we analyze what continues to happen with variables like the dollar and the price of fuel; however, future projections indicate that both financially and strategically, now more than ever, it is time to promote alliances such as the one we hope will be approved in Colombia, which will make us part of the same business group as Avianca.

This holding company arrives with the shared vision of creating a leading air transport group in Latin America, capable of facing the challenges of the 21st century, while seeking to have one of the lowest costs in their respective markets. The combination of Avianca and Gol airlines, along with Viva's operations in Colombia and Peru, and a stake in Chile's Sky Airlines, would create a business that could compete, for example, with Latam Airlines Group (in terms of scale), which would favor the airline industry in Colombia and the region in terms of access, price, connections and offering. In figures, the airlines of the holding company as planned today would add around 7.6 million seats, compared to 7.3 million in Latam, which means that we would reach a milestone that would shift the balance of power in the region.

It is worth emphasizing that being independent for an airline, in this post-COVID period, imposes great and uncertain financial challenges, especially due to the evolution of macroeconomic variables that in the current year would lead to an operational cost overrun because of the high price of fuel and the unfavorable exchange rate. It is no secret to anyone that having strong financial muscle is perhaps the most decisive factor when analyzing the sustainability of an airline in such a volatile scenario.

Guaranteeing the sustainability of Viva and what has been built in these 10 years is, by far, the greatest justification in joining the project of a large holding company, such as the one proposed by Abra Group. Providing continuity to the brand, the jobs it generates and the model, which has proven to be the right one, are the main engines of the desire for the approval of an alliance that will guarantee much more than economic solidity.

Because of that, it is important to reiterate that the objective of this alliance from the customer point of view will be to work on our offering and service, strengthening strategic routes, and in our particular case, to return to the growth trajectory that we were building up to 2021, where we continually evaluate arriving at more and more destinations. All of this permits us to honor our value proposition, where we improve our connectivity and access to air transport in the region. This will also allow us to implement improvements in our process efficiency to remain faithful to the promise of flying at  an ultra -low cost.

We are confident that the competent authorities will reach the best conclusion for this alliance in order to maintain the many benefits that we bring to Colombians. It is an alliance aimed at growth, learning from other companies, providing more options to travelers who, for 10 years like us, have believed in the democratization of the skies. At Viva, we will continue working to be the airline with the lowest unit cost per passenger in the world and take many more people flying for the first time.