Routes Reconnected: Avianca CEO: “there was a lot of nonsensical flying in the region”

Avianca CEO “there was a lot of nonsensical flying in the region”

Avianca’s CEO believes that the carrier was too ambitious, grew too much, and was too stretched, which ultimately contributed to entering Chapter 11.

Anko van der Werff, CEO of Avianca Holdings, was adamant: “We were far too overambitious and stretched too thinly, including in terms of management attention.”

Werff, who became CEO about 18 months ago, said that Avianca’s capacity growth just wasn’t rational.

“We were sometimes growing three or four times what the economies of our countries could sustain.  It is Latin America, but the growth rates were simply outpacing economies way too much.”

Even markets with already high frequencies saw big growth. “Our domestic markets, and also on some of our other main markets and city-pairs, had capacity growth of almost 100%.  This was on city-pairs where you’re already flying 15 frequencies a day or something. That will never work.”

Back to basics for Avianca

“We have learned that we don’t need to be in all of our markets,” Werff said. “Peru was very difficult because we saw that it didn’t really work, but we wanted to keep a footprint there.  That became unviable because of COVID.”

“There was a lot of nonsensical flying in the region. Not so much touching our hubs – we had to go back to our core strength.”

Avianca’s network changes have necessarily led to fleet simplification and reduction.  “When I came in, we had 190-200 aircraft, but that’s been brought down to the 150 range.”

This is all part of Werff’s 2021 ‘back to basics’ turnaround plan – now its ‘chapter 11’ plan – made before coronavirus took hold.  At its most fundamental, Werff says this includes “planes on time, bags on time, making sure that everything works.”

Avianca CEO “there was a lot of nonsensical flying in the region” (2)

Avianca Peru ended in May 2020. The parent company wanted to keep Peru, but it “didn’t really work.”

Avianca availing of Bogota’s “very privileged position”

Werff considers Avianca to be a hybrid carrier.

“You want to have a bigger footprint than just one market – it’s not just Colombia, even though the country has 50 million people and Bogota has a catchment of 10 million.

“Central America, and El Salvador as a hub, really works for us.  The former TACA franchise was very successful in many ways.  You’re never going to give up on that.

“But if you look at Copa and its connecting model, and where Bogota sits, very high up in South America, it’s a very privileged position. 

“It’s very strong and with one big advantage over Copa: our large home market.  And there’s not much we couldn’t do with narrowbodies within the Americas from Bogota.”

Europe’s now a “waiting game”

“VFR and leisure will rebound quicker than corporate, and domestic quicker than international. 

“We are looking for more destinations domestically, but we already have Colombia’s biggest network and more frequencies than anyone else.  So our change domestically will be more about frequencies and utilisation than new destinations.”

Pre-coronavirus, Avianca served eight destinations in Europe. “Europe’s a different ballgame now.  We did have one or two more destinations on our radar, but that’s definitely a waiting game.  You’re not going to take those decisions right now.”

Avianca CEO “there was a lot of nonsensical flying in the region” (3)

Avianca was keen on adding more service to Europe, but this is now on hold.


Comments

No comments yet, be the first to leave a reply...

Leave a Comment

Your email address will not be published. Required fields are marked *

*