Ecuador is a republic located in South America, sharing a border with Colombia, Peru and the Pacific Ocean. Although the republic of Ecuador is a small country, it has airports in 15 cities, however only two of them are international; they are Quito International Airport (Mariscal Sucre Airport) and Guayaquil International Airport (Simon Bolivar Airport). The main domestic airline is AeroGal, though there are other small and charter airlines. LAN Airlines, American Airlines as well as Iberia Airlines all operate regular flights to Guayaquil and Quito. The Directorate General of Civil Aviation of Ecuador is the main regulating authority in the country.
Airports in Ecuador
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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.
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.
Ecuador’s largest domestic carrier TAME is pursuing ambitious international expansion which will result in its international network growing from two to nine destinations in less than a year. TAME has added five new international destinations over the last six months, including Sao Paulo on 07-Jan-2013, and is planning to add Buenos Aires and New York by mid-2013. New York will be served with A330s as TAME becomes only the sixth airline group in Latin America to operate widebody aircraft.
The expansion is risky as TAME competes in its home market against Latin America’s largest airline groups – LAN and TAM parent LATAM and Avianca-TACA. The LAN-TAM and Avianca-TACA mergers have made it very difficult for small independent carriers to survive in Latin America, particularly those not following regional carrier models. TAME in recent years has been primarily a regional carrier, operating domestic routes below the radar screens of the big airline groups, but its current expansion puts the government-owned carrier into a much different and more competitive sector.
Ecuador, a small country sandwiched between Colombia and Peru and hitherto little known outside South America, has been in the media eye for the last three months, since the Wikileaks’ founder Julian Assange took up residence in the Ecuadorean Embassy in London seeking diplomatic immunity from extradition, prompting a growing international crisis. While there is not the same degree of intrigue in the airport business in Ecuador the country is, like Germany, making heavy weather out of opening its new capital city airport.
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.