AEROPUERTO INTERNACIONAL MONSEÑOR OSCAR ARNULFO ROMERO
14
Produced in El Salvador by:
On behalf of:
E V E R Y N E W R O U T E , E V E R Y W E E K
S U B S C R I B E T O O U R F R E E W E E K L Y N E W S L E T T E R , V I S I T W W W . A N N A . A E R O
ESTUARDO ORTIZ,
Executive VP & Chief Revenue Officer of Avianca, highlighted how
El Salvador is becoming a major point of connectivity and a major opportunity for the
airline. Avianca and TACA merged just over four years ago and had 10 AOCs and over 200
legal entities. The airline has focused on costs and revenues, and has seen a 79% growth
in revenues in the last four years as it focuses on becoming a single proposition to its
customers. The airline’s 100th passenger destination, to London Heathrow, begins in July.
San Salvador is one of the airline’s three strategic hubs, and last year it transported 3.2
million passengers to and from the airport. New routes were launched to Chicago O’Hare
(in September) and Newark (in December). However, there are still more opportunities
and the airline would like to add at least another 10 destinations to the north, but also
sees Brazil as an opportunity. New aircraft such as ATR 72-600s, Boeing 787s (replacing
A330s in Bogota later this year) and longer range Airbus A320neos will all help with
expanding the airline’s network in the coming years.
PANEL 1: THE CONSOLIDATORS – IN SEARCH OF
STABILITY AND CONTINUITY
. This panel featured:
Michael Bell, Consultant, Spencer Stuart (moderator);
Estuardo Ortiz, Executive VP & Chief Revenue Officer, Avianca;
Todd Scott, Director of Global Network Planning, UPS Airlines;
and Peter McGlade, Senior Strategic Advisor, Southwest
Airlines. Consolidation has possibly been greatest in the
Americas in recent years with United/Continental, AirTran/
Southwest, American Airlines/US Airways in the north, and
Avianca/TACA and LAN/TAM in the south. However, with
high fuel prices many airlines had seen their break-even load
factors climb to 80% or more. When asked about Southwest’s
imminent move into the Caribbean market, Estuardo Ortiz
jokingly responded “I don’t really like it” before pointing
out that the airline was already competing with the likes of
JetBlue and Spirit Airways. Peter McGlade insisted that the
integration of AirTran with Southwest had gone well because
of the similar adventurous culture of the two companies.
The Avianca/TACA networks had only overlapped by 1%, but
since merging the synergy savings had enabled the airline to
add more than one new route per month. UPS, with a fleet of
over 230 aircraft of its own, and over 300 additional aircraft
operating its services, had tried to merge with European based
TNT. However, European regulators had stepped in to halt this
proposed tie-up. Todd Scott revealed that the small package
market is not as culturally important in Latin America as
in other regions. All panellists agreed that in a merger, the
biggest challenge was people, and that regular and open
communication was critical.
PANEL 2: THE NICHE PLAYERS – IN SEARCH OF
CHANGE AND NICHE SUCCESS
. This panel featured:
Michael Bell, Consultant, Spencer Stuart (moderator); Juan-Emilio
Posada, Executive Chairman, VivaColombia; Captain Jagmohan
Singh, CEO, Caribbean Airlines; and Albert Kluyver, CEO, InselAir.
According to Juan-Emilio Posada, VivaColombia, with a fleet
of just five aircraft at present, will continue to grow but only
where it can make the most money using the ULCC (Ultra Low
Cost Carrier) business model. The airline is currently looking at
expansion in international markets. Although the airline took the
high-risk strategy of avoiding GDSs, this has not been a problem.
The market has proven to be price elastic. The airline shares
some common ownership with Mexico’s VivaAerobus but there
are no plans at present to create a Viva Group. Captain Singh of
Caribbean Airlines revealed how the airline was going through
a period of stabilisation, following the merger with Air Jamaica.
There are cultural differences between Jamaica and Trinidad
& Tobago, but the airline is trying to create a Caribbean brand.
Government taxation on international travel is a big hindrance as
most of the flying is international due to the proliferation of small
nations in the region. While Caribbean Airlines’ focus has been
on the UK and North America its future focus was likely to be on
Central America. Caribbean Airlines and Insel Air both identified
seasonality as a major issue, with the market busy for eight
months of the year, and quiet for four months. The question was
asked as to why there were no LCCs in the region, but Insel Air
responded by saying they were an LCC, and that fares were lower
now than they were five or even 10 years ago.
