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- Lan Airlines S.A.
Americo Vespucio 901, Renca
- Main hub
- Bogota El Dorado International Airport
- Business model
- Full Service Carrier
- Joined Alliance
- Association Membership
LAN Colombia (previously Aires) is a Colombian airline based in Bogota, with additional bases in Barranquilla and Medellin. LAN Colombia has experienced strong growth in recent years, capturing a larger share of the growing domestic market and expanding into international markets across South, Central and North America. It began operating under the brand LAN Colombia as of 3-Dec-2011.
Location of LAN Colombia main hub (Bogota El Dorado International Airport)
133 total articles
21 total articles
Oneworld has increased its presence in Colombia, Latin America’s third largest market, with LAN Colombia formally joining as an affiliate member on 1-Oct-2013. LAN Colombia is the second largest domestic carrier in Colombia after Star Alliance member Avianca and has a small but growing international operation.
Colombia is an important growth market but the impact of adding a Brazilian member is much more significant. Oneworld has set a 31-Mar-2014 ascension date for Brazil’s largest carrier TAM, which is now part of the LATAM Airlines Group along with LAN Colombia and four other LAN-branded carriers that are already oneworld members.
With LAN Colombia and subsequently TAM, oneworld will become the largest alliance in Latin America with a projected 27% share of seat capacity. Star will still have a respectable 16% share, which could grow to about 18% based on probable new members, and will remain the dominant alliance in Colombia.
Growth in Colombia’s domestic market continued full steam ahead during the first five months of 2013 as the country's passenger growth jumped 21% to roughly 8.5 million. This follows already strong 15% growth in domestic traffic during 2012, when the country's airlines transported close to 19 million domestic passengers.
The expansion reflects Colombia’s stature as one of the fastest growing domestic markets in the world, fuelled by solid economic growth, a rising middle class and pent-up demand and opportunities for penetration by low-cost carriers. Presently, VivaColombia is the only carrier operating under a low-cost business model in the country. While it does operate on some of Colombia’s trunk routes, VivaColombia is designing its network around a point-to-point framework to bypass the country’s busier and more congested airports, namely Bogota.
Colombia’s domestic market has undergone a subtle transformation during the last few years as LAN, which is now part of LATAM Airlines Group, purchased low-cost carrier Aires, overhauled its operations, adopted the full-service model and rebranded the carrier as LAN Colombia to solidify a presence in the increasingly important Colombian market. Copa Colombia (formerly Aerorepublica) opted to shift its focus to international operations while VivaColombia introduced service with the goal of replicating the low-cost business model its sister carrier VivaAerobus has forged in Mexico.
Colombia recorded 15% growth in domestic passenger traffic in 2012 and should see more double-digit growth in 2013 driven partially by expansion at low-cost start-up VivaColombia. The Colombian international market also grew by 13% in 2012 and should see more rapid growth in 2013 driven partially by expansion at LAN Colombia.
Colombia’s strong economy and growing middle class population provide favourable market conditions. The rise in Colombia’s LCC penetration rate, which has always been significantly lower than Latin America’s other two major markets, is also stimulating demand as VivaAerobus brings low fares to more domestic routes. But competition in Colombia is intense, making it difficult to achieve profitability in the domestic market.
Avianca-TACA will come full circle during 2H2013 as its various airlines unify under the Avianca brand more than three years after the Avianca-TACA merger kickstarted consolidation in Latin America and drove the decision by LAN and TAM to form what is now the region’s powerhouse LATAM Airlines Group. During 2013 the competition between the two largest airline groups in Latin American will only intensify in the markets where they already compete fiercely – Colombia, Ecuador and Peru.
With Avianca-TACA completing its merger more than two years ahead of LATAM, Avianca-TACA has the benefit of harvesting a combined network whereas LATAM is just beginning to ferret out the benefits of its newly combined network resources.
In addition to continued competitive pressure from LATAM during 2013 Avianca-TACA will also encounter some new competition on international flights from Ecuador and some pressure from startup VivaColombia in its largest market Colombia. At the same time Avianca-TACA continues to battle infrastructure constraints at its largest hub Bogota, which could result in further expansion at its Lima and San Salvador hubs.
LATAM Airlines Group announced on 07-Mar-2013 that its TAM, TAM Paraguay and LAN Colombia subsidiaries would join its sister carriers in oneworld, confirming moves which had been considered a foregone conclusion for 18 months. The Star Alliance now faces the risk of not having a member in Brazil, one of the world’s most important growth markets, after TAM shifts from Star to oneworld in 2Q2014. But the void will not last long as Brazil’s fourth largest carrier, Avianca Brazil, will almost certainly join its sister carriers in Star, potentially by the end of 2014.
Meanwhile, Brazil’s second largest carrier Gol continues to be wooed by SkyTeam. With TAM moving to oneworld and Avianca Brazil expected to join Star, the stakes mount for SkyTeam while the benefit of maintaining independence for Gol diminishes.
The Colombia-US market is poised for rapid growth following the implementation of open skies between the two countries on 01-Jan-2013. JetBlue and LAN Colombia have already unveiled plans to add services in the Colombia-US market during 2013 and other carriers, including market leader Avianca, will likely follow.
JetBlue Airways plans to add a third Colombian destination, Medellin, from 13-Jun-2013 while LAN Colombia plans to deploy its newly acquired fleet of 767s on US routes. JetBlue has rapidly grown in Colombia since Bogota became its first destination in South America in 2009. LAN Colombia began serving the Bogota-Miami route in early 2012 with A320s and plans to transition these flights to 767s as well as launch new US routes.
There was 8% passenger growth in the Colombia-North America market through the first 10 months of 2012 to 2.1 million passengers, according to Colombian CAA data. The average load factor in the market was 84%, which suggests the market remains undersupplied. (The Colombia-North America market includes flights to/from the US and Canada but Canada only accounts for 3% of the total market).
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