September Jurisdictional Update – Colombia

Colombia is facing unprecedented times, says Jose Elias with Del Hierro Abogados in Bogota, Colombia. There is a new president, Gustavo Petro who is a former guerrilla fighter who, at 17, joined the 19th of April Movement, which later became the M-19 Democratic Alliance. He was purportedly involved in the Palace of Justice Siege in November 1985, where more than 100 people died, including 11 of the country’s 21 Supreme Court Justices.

As a far-left candidate, he has a new tax law that will increase taxes on everything, including income tax and more, which will make it hard for foreign investment to succeed in Colombia. He has the majority in congress, so it is likely his agenda will succeed.

There are also two different laws affecting the airlines. One involves an increase in fees for passenger rights, and the other is an open skies agreement that allows any airline that wants to fly into Colombia. There is no more cabotage, and we are left with several redundant laws. Furthermore, there are no slots available to allow for the open skies agreement they are trying to implement. There are no less than three airlines trying to fly into Colombia, but no slots to accommodate them.

In addition, Avianca and Viva (a subsidiary of Ryanair) are merging, but Avianca’s financials are not good, so there is a chance the merger will have a negative effect on Viva Air. Ryanair’s board president will become the president of Avianca’s board, and the combined companies will have 65% of the slots in Colombia. If the merger does not go well, most of the slots will be controlled by a failing airline, so the next six months will be interesting to watch.