Two airline bankruptcies shake up Colombia's aviation industry

Apr 27 2023 Travel trends

The aviation industry in Colombia has been thrown into turmoil with the bankruptcies of two airlines, causing widespread disruption and uncertainty for travelers and stakeholders. The collapse of Avianca's regional affiliate, Avianca Ecuador, and low-cost carrier Viva Air's Chilean subsidiary, Viva Air Chile, has raised concerns about the resilience of the aviation market in Latin America, which has already been hit hard by the Covid-19 pandemic.

Avianca Ecuador and Viva Air Chile - bankruptcy in quick sequence

Avianca Ecuador, a subsidiary of Colombia's flagship carrier Avianca, filed for bankruptcy in March 2021, citing financial difficulties caused by the pandemic. The airline had been operating flights between Quito and other cities in Ecuador, as well as international destinations in South America. Its collapse has led to the cancellation of dozens of flights and left thousands of passengers stranded.

Meanwhile, Viva Air Chile, a low-cost carrier launched in 2017, also filed for bankruptcy in March 2021. The airline had been operating flights between Santiago and other cities in Chile, as well as some international routes. Its demise has left many travelers with disrupted travel plans and raised questions about the viability of the low-cost airline model in the region.

The bankruptcies of these two airlines have highlighted the challenges facing the aviation industry in Latin America, which has been hit hard by the Covid-19 pandemic. Travel restrictions and reduced demand for air travel have led to a sharp decline in revenues for airlines, making it difficult for them to cover their operating costs and pay their debts.

The collapse of Avianca Ecuador and Viva Air Chile has also raised questions about the resilience of the airline industry in Colombia, which has been struggling with financial difficulties even before the pandemic. Avianca, one of the oldest airlines in Latin America, filed for bankruptcy in the United States in May 2020, and has been working to restructure its debt and operations in order to survive.

Possible solutions for struggling airlines

The bankruptcies of Avianca Ecuador and Viva Air Chile have also highlighted the need for greater oversight and regulation of the aviation industry in Colombia and the wider region. Many industry experts are calling for more stringent controls over airline operations and financial reporting, as well as greater transparency and accountability from industry stakeholders.

Despite the challenges facing the aviation industry in Latin America, there are signs of hope for the future. The roll-out of Covid-19 vaccines and the gradual lifting of travel restrictions are expected to boost demand for air travel, providing a much-needed lifeline for airlines in the region. The bankruptcies of Avianca Ecuador and Viva Air Chile may also lead to consolidation and restructuring in the industry, which could ultimately lead to a stronger, more resilient aviation market in Colombia and beyond.

In conclusion, the bankruptcies of Avianca Ecuador and Viva Air Chile have caused significant disruption and uncertainty for the aviation industry in Colombia and the wider region. However, they have also highlighted the need for greater oversight and regulation of the industry, and the potential for consolidation and restructuring to create a more sustainable and resilient aviation market in the future.