TACA

TACA continues expansion in Peru with A330s ahead of rebranding as Avianca

TACA Peru is planning further expansion with the introduction of widebody aircraft, two A330s, which will be used initially to increase capacity to Buenos Aires, Bogota and Miami. The upcoming expansion at the Avianca-TACA subsidiary follows rapid growth by the Peruvian carrier over the last two years in both the domestic and international markets. TACA Peru earlier this year became the second largest carrier in the country’s fast-growing domestic market, a position it has had for several years in Peru’s international market.

The new fleet of Lima-based A330s should help Avianca-TACA close the gap with rival LATAM, which is by far the largest airline group in Peru and the broader South American market. Avianca-TACA has been focusing on expanding its Lima hub, which is well positioned as a north-south hub for the fast-growing intra-Latin American market, as congestion at its main hub at Bogota increases. TACA Peru is one of several TACA carriers being rebranded Avianca in 1H2013 as Avianca-TACA finally moves to a single brand three years after it completed its merger.

Avianca Brazil to slow down expansion in 2013; to benefit from TAP acquisition and Star membership

Avianca Brazil plans to slow down expansion in 2013, taking a hiatus following a growth spurt which saw the carrier more than double in size in less than two years. Avianca Brazil’s outlook remains bright despite Brazil’s challenging market, which has led the country’s two largest carriers to cut domestic capacity, as it is poised to benefit from anticipated membership in the Star Alliance and the possible acquisition of TAP Portugal by its parent company.

Avianca Brazil is 100% owned by Brazilian investment firm Synergy Group, which is also the largest shareholder in Avianca-TACA Holding, the parent of several carriers in other Latin America countries including four members of the Star Alliance. Synergy is also the only remaining bidder in the sale of Star member TAP Portugal, which has an extensive network in Brazil that would add significant value to Avianca Brazil’s all-domestic network.

Avianca-TACA and Copa put Star on top in Latin America but the victory will be short-lived

Six carriers from Latin American airline groups Avianca-TACA and Copa are formally entering the Star Alliance on 21-Jun-2012, marking the first of several key alliance movements in the fast-growing Latin American market. The six carriers – which include two from Colombia and one each from Costa Rica, El Salvador, Panama and Peru – will temporarily widen Star’s market-leading position in Latin America. But the gain will not offset the upcoming loss of Latin America’s largest airline TAM, which will be exiting Star within 24 months. Star would find itself as the third biggest alliance in the key Latin American market under the increasingly likely scenario of TAM joining new sister carrier LAN in oneworld and Brazil’s other major carrier, Gol, being affiliated with SkyTeam.

Star has enjoyed the status of Latin America’s largest alliance since TAM joined in May-2010. Star has since accounted for about 20% of total capacity in the Latin America and Caribbean region, compared to about 14% for oneworld and 10% for SkyTeam.

Aeromexico continues to build partnerships outside SkyTeam

Aeromexico’s new codeshare agreement with Brazilian carrier TAM represents the second agreement Mexico’s largest carrier has signed with a non-SkyTeam carrier in the last two months. The partnerships reflect the need for both Star and SkyTeam carriers to access key markets in Latin and Central America that are not available through their respective alliance partners.

The Avianca-TACA relationship with Aeromexico, announced in Mar-2012, was surprising given that the Kriete family, which is a main shareholder in Avianca-TACA, is also a major holder in Aeromexico’s competitor Volaris. But Aeromexico has been pursuing a tie-up with Colombia’s largest carrier, Avianca, since it started Mexico City-Bogota flights in 2010. The chance was brushed aside once Avianca-TACA opted to join the Star Alliance, but now the agreement will include more connections than just Bogota as Avianca-TACA cited an ability to partner with Aeromexico on flights to Central and South America during the second half of this year.

Key decisions loom in 2012 for Avianca-TACA as integration effort nears completion

The spotlight in Latin America this year will primarily be shone on LAN and TAM as the two airline groups complete their landmark merger and begin the integration process. But it is also a key year for Avianca-TACA, which completed their merger in early 2010 and has completed about 90% of its integration process.

The integration of Avianca and TACA will be wrapped up this year as the carrier formally joins the Star Alliance, completing two major milestones for the fast-expanding airline group. Several major decisions also loom for the group in 2012 related to its corporate structure, branding and fleet.

Structurally, a decision will likely be made by the end of this year on whether to bring Avianca Brazil into the publicly traded holding company Avianca-TACA. The Brazilian carrier is still owned by the Synergy Group, the holding company controlled by the Efromovich family which also owned Avianca prior to its merger with TACA (the Efromovich family now has a majority share in Avianca-TACA Holding). As a result, Avianca Brazil remains separate although it has a co-branding arrangement with Colombia-based Avianca.

Latin America, a bright spot for aviation, with continued growth and robust aircraft requirements

IATA, Boeing and Airbus have again noted the potential of the Latin American market, with IATA describing the region as a “bright spot in the aviation world” and Airbus commenting that Latin America’s aviation sector “has never been stronger”, following a boom in the sector over the past five years. Boeing has similarly noted the large potential in the Latin America market in its market forecast.

Latin America is “the only region generating aggregate profits for three consecutive years," IATA CEO and director general Tony Tyler noted at ALTA this month. On the outlook for the region, he commented: “Taking a long-term view of Latin American aviation, one can only be optimistic. The economic potential of this vast and varied geography can only be realised with a successful aviation industry”.