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Colombia’s aviation sector operates under the open skies Andean Pact with other South American and Caribbean countries. Bogotá’s El Dorado International Airport is the main airport and home to flag carrier Avianca as well as AIRES and Aero República. The country's second aiport is José María Córdova International Airport, however, its second busiest is Rafael Núñez International followed by Alfonso Bonilla Aragón International (also known as Palmaseca International Airport).
Aerocivil controls air safety and navigation for Colombia, while the Civil Aviation Administration regulates and controls the industry.
Airports in Colombia
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Latin America’s powerhouse LATAM Airlines Group believes it has turned a corner in its Brazilian operations after enduring weak margin conditions within Brazil’s domestic environment since the merger of LAN and TAM officially closed a little over a year ago.
The company’s overall 3Q2013 results were somewhat buoyed by a 19% improvement in Brazilian domestic unit revenues year-on-year as LATAM slashed its supply within Brazil by 6% during the quarter. For the 9M2013 time period LATAM’s ASKs within Brazil contracted by 9%.
While the rebound within Brazil in commendable LATAM still faces challenges with respect to the devaluing of the BRL, which fell 13% during 3Q2013 against the USD. LATAM is attempting to blunt the effects of currency fluctuations through hedging schemes and transitioning TAM’s debt to the LATAM balance sheet, which is denominated in the USD.
Star Alliance considers new platform for low-cost airlines, targeting Brazil's Azul & India's IndiGo
The Star Alliance is looking at following SkyTeam in offering a partnership platform for low-cost and hybrid carriers. Star sees the new platform, which would fall short of full membership but provide a model for selected LCCs to work with members, improving coverage in key markets.
Star has started to court Brazilian LCC Azul and Indian LCC IndiGo to join the potential programme, which would facilitate connections with participating Star members. Star has been trying to find a solution for India since 2011, when efforts to bring in Air India as a planned new member were suspended, while earlier this year Brazil’s largest carrier, TAM, began the process of transitioning from Star to oneworld.
But Star’s plan for a hybrid and LCC platform is controversial. Some Star members are against the concept of bringing in LCCs, fearing it could water down the alliance’s offering. Star’s pursuit of Azul is particularly controversial as at the same time the alliance has begun working at bringing in full-service carrier Avianca Brazil.
Underlying JetBlue’s recent headline grabbing release of its new premium product that includes semi-private suites, is a network strategy and expansion that continues unabated, resting on the pillars of expanding from Boston, Fort Lauderdale and its strategic base and headquarters of New York JFK.
The latest round of market additions adhere to the carrier’s stated goals of broadening its reach into the Caribbean as Trinidad and Tobago is added to its growing network in the region. At the same time, JetBlue’s milestone 50th destination from its ever-important Boston base is Savannah, Georgia, a largely leisure destination which presently is served by US majors with regional jets to their large hubs.
With the planned new service to Savannah, Port of Spain and Port Au Prince, JetBlue is taking a three-pronged approach, serving all those markets from its strategic bases – most notably Fort Lauderdale, a market JetBlue is growing as a launch pad for strengthened service to the Caribbean.
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.
Avianca has cut back significantly in Ecuador’s domestic market as it focuses on domestic growth in Colombia and Peru. The group’s Ecuadorean subsidiary, AeroGal, has redeployed capacity to the international market, which it sees as more profitable following the opening of a new airport at the capital Quito.
Rival airline group LATAM however has been expanding rapidly in the Ecuadorean domestic market. In 2Q2013, Ecuador was the fastest growing domestic market for LATAM but the slowest domestic market for Avianca.
Government-owned Ecuadorean carrier TAME also has been expanding, leading to a further drop in market share for Avianca. The Ecuadorean market also saw in 2Q2013 the entry of a fourth domestic carrier in Linea Aerea Cuencana.
Avianca’s closure of its hub in Costa Rica has opened up opportunities for other carriers, particularly US carriers and Panama-based Copa. The Latin American airline group significantly downgraded its operation at the Costa Rican capital San Jose in late 2Q2013 as it cut five routes and reduced frequency on three others. Avianca previously considered San Jose as one of its four hubs but now calls it a focus city.
US carriers have been adding capacity to San Jose, with Delta launching service to Los Angeles, one of six destinations cut by Avianca. JetBlue has launched service to Fort Lauderdale.
Copa Airlines is also adding capacity to San Jose and will become the airport’s largest carrier in early Oct-2013, when it adds a ninth daily flight from Panama City. Avianca was using San Jose as a competing north-south hub although the number of transit passengers had been small compared to its other hubs and miniscule compared to Copa’s hub in Panama City.