San Jose Juan Santamaria International Airport

Delta presses forward to build a competitive network in a consolidated and mature US market

Delta Air Lines continues to leverage the competitive strength it holds over its US legacy peers to flesh out its network and build pockets of strength as United and Continental remain in the throes of their merger integration and American and US Airways lay the groundwork to begin the complex process of combining their respective organisations.

During the last couple of years Delta has used the nimbleness it enjoys versus its legacy domestic competitors to broker equity investments in foreign carriers to build a robust network ahead of the completion of US consolidation. Those investments have moved in tandem with Delta’s bolstering its presence in New York through its slot swap deal with US Airways and its investment in facilities at JFK and LaGuardia airports.

During 2013 Delta is attempting to strengthen its position in the fragmented but strategic Los Angeles market through a 12% boost in daily seats year-over-year from Jul-2012 to Jul-2013.

Avianca-TACA primes for re-branding and intensifying competition with LATAM

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.

TAP Portugal’s privatisation enters final stage, with Avianca-TACA parent emerging as only bidder

TAP Portugal is likely to end up in the hands of Synergy Aerospace, the majority owner of Latin American airline group Avianca-TACA, following the surprise announcement on 18-Oct-2012 by the Portuguese government that it had retained only one bidder to proceed to the second stage of TAP’s sale process. Final negotiations still have to start and it is as yet unclear how much Synergy Aerospace will pay for the debt-laden Portuguese flag carrier, which is in need of capital to fund expansion and fleet renewal.

The selection of Synergy Aerospace as future owner of TAP would reinforce the Portuguese carrier’s leading position in the Europe-Brazil market. It also meets Synergy's long-held goal to expand into the Europe-Brazil and other long-haul markets. Synergy-owned Avianca Brazil is a significant and fast-expanding player in Brazil's domestic market but does not operate any widebody aircraft and has only one international route. Avianca Brazil could replace TAM as TAP's partner for connecting flights in Brazil.

Mexico’s Interjet plans further expansion with new Superjet fleet targeting thinner routes

Mexican low-cost carrier Interjet, which has seen its share of Mexico's domestic market grow to roughly 25% in its six short years of existence, sees ample opportunity for further expansion in both the domestic and transborder markets. Interjet began international services in late 2011 and is continuing its international push with the upcoming launch of service to New York, its sixth destination outside Mexico. As the first of its Sukhoi Superjet 100 aircraft enters service later this year Interjet is now preparing to stoke its continued growth by targeting new medium-density markets.

Even prior to Mexicana’s demise in Aug-2010 Interjet recorded rapid growth in the domestic market place as it offered a semi-frilled product while adopting a low-cost, low-fare business model. By the time Mexicana sought creditor protection and ceased operations in Aug-2010 Interjet’s domestic market share had increased to more than 15%.

United Airlines walks away the sore loser after Southwest wins international expansion from Hobby

A decision by Houston City Council to allow Southwest Airlines to press forward with the 2015 launch of international flights from Hobby Airport is a vote that the new service will blunt United’s threatened cuts from Houston George Bush Intercontinental Airport, which could result in a capacity reduction of up to 10% at the largest hub in United’s network. United will also axe plans to introduce long-haul flights, including to Auckland, but United is using Southwest's win as an excuse to make these overdue network changes.

The battle between Southwest, United and the City of Houston flared earlier this year as Southwest approached the Houston Airport System (HAS) to conduct a feasibility study examining the development of a new terminal at Hobby to accommodate short-haul international flights from the airport to Mexico, Central and South America.