PLUNA

Aerolineas Argentinas, BQB, Gol and LAN-TAM poised to benefit from demise of Uruguay's Pluna

The demise of Pluna has left a large void in the Uruguayan market that will be partially filled through expansion by carriers from neighbouring Argentina, Brazil and Paraguay as well as by tiny Uruguayan regional carrier BQB Air. The Uruguayan Government has opted against bailing out Pluna, which ceased operations on 05-Jul-2012, and is instead now trying to find another carrier (either new or existing) to take over its routes and, potentially, its employees and fleet.

But the end result will almost certainly be the the lack of a network carrier for Uruguay and the sale of Pluna’s 13 Bombardier CRJ900 regional jets to overseas buyers. While some of Pluna routes could be taken over by other carriers, there will almost certainly be a steep reduction in traffic at Montevideo’s Carrasco International Airport as the Uruguayan market is too small to support more than a handful of point-to-point routes.

Uruguay's Pluna warns of collapse, but CEO's missive may be more political than financial

Pluna CEO Matthias Campiani has issued a warning of a potential collapse of Uruguay’s flag carrier, driven by sluggish Latin American economies and the restrictive policies of the region’s governments, particularly Argentina, which has practiced fierce protectionism since the renationalisation of flag carrier Aerolineas Argentinas in 2008.

Yet Uruguay's challenges in Argentina – where Pluna deploys 21% of international seats – are not new, as evidenced by the carrier's recent strategy to expand into Brazil instead. Argentina's protectionism has understandably been a sore point for Mr Campiani, who is resolute and will see that objectives are accomplished. While Pluna has encountered losses, it has in recent times broken even. There is no doubt Pluna has suffered from protectionism and like most carriers is seeing a downturn from global economic events, but a collapse is difficult to envision.

Yanking of Jazz Thomas Cook contract underscores ever-growing difficulty in regional airlines

A decision by travel package operator Thomas Cook to end a five-year charter agreement three years early with Canada’s Jazz Aviation reflects the stark realities regional carriers face in attempting to meaningfully diversify their core business of providing feed to network legacy airlines.

While Thomas Cook ended the deal due to souring demand, it leaves Jazz again with just one client, Air Canada. Tensions between Jazz and Air Canada have flared over a dispute on rates paid to Jazz that could result in the regional carrier having to pay its partner CAD26 million (USD26.2 million) if an arbitrator later this year rules in Air Canada’s favour.

Paraguay beckons for bold airport investors

The Government of Paraguay has passed a bill to concession out the Asunción Silvio Pettirossi Airport, along with several of the country's regional airports. If approved by Paraguayan President Fernando Lugo, the 30-year concession will require an estimated USD100 million investment, which seems to be a lot of money for a country that has widely been regarded as something of a backwater in Latin America.

Local unions are vehemently opposed to the concession and about 2,000 unionised airport workers are now planning to wage a 10-day strike at Asunción Airport. The strike is expected to start at end of this week and result in widespread delays and cancellations.

Paraguay is one of only two landlocked countries in South America, surrounded by Brazil, Argentina and Bolivia. It famously fought Brazil, Argentina and Uruguay between 1864 and 1879 in The War of the Triple Alliance, leaving Paraguay with a population of only 200,000 and economic stagnation that lasted half a century. But Paraguay has undergone something of a political resurgence since the 35-year military dictatorship of Alfredo Stroessner came to an end in 1989, allowing for regular democratic presidential elections.

Pluna and BQB expansion drive big growth for Uruguay

Uruguay’s two main airports have been recording rapid growth the last several months driven by continued expansion of flag carrier Pluna and the launch of local start-up BQB Air. Based on Feb-2011 data from Uruguay’s civil aviation authority DINACIA, arriving traffic at Montevideo Airport was up 33% to 104,287 passengers while arriving traffic at Punta del Este was up 42% to 18,585 passengers.