Colombia's competition authority has rejected Avianca's proposal to merge with low-cost carrier Viva Air.
The Civil Aviation Authority of Colombia said that an integration between Viva and Avianca -- Colombia's largest airline -- would reduce domestic route competition to a level not seen in seven years. Avianca, Viva Air and Viva's Peruvian affiliate operate 93.7% of domestic Colombia routes and compete against one another on approximately half of those.
Following the decision, Avianca vowed to continue pushing for the Viva tie-up.
"We are concerned about the direction of the decision, as it goes against the needs of the country and ignores the potential effect that the disappearance of Viva would have on users and the market," CEO Adrian Neuhauser said in a prepared remark.
The company said it will consider all legal alternatives to receive approval for an integration with Viva.
Avianca, which exited bankruptcy late last year, originally announced its plan to merge with Viva in April. Under the proposal, the two brands would be kept separate.
A month later, Avianca and Brazil's Gol announced a plan to join under a holding company called Abra Group Limited.