Avianca Holdings: beginning its quest to build up the Bogota hub

In addition to its quest to attain financial fitness, the South American airline group Avianca is engaging in refining its network, exiting unprofitable routes and opting to bolster its connectivity at its largest hub in Bogotá.

Avianca has spent the past year working to improve its balance sheet, including restructuring debt and cutting its aircraft order book to create more manageable capital expenditures during the next couple of years.

As it works to create a stable financial foundation, Avianca is also retooling its network, having eliminated 20 unprofitable routes over the past year, including a pull-down of its domestic presence in Peru.

The company believes it can push its levels of connecting passengers in Bogotá to approximately 50% over the long term, and is already laying the groundwork to leverage its position at the airport to create more connections. But in the short term, Avianca believes there is some overcapacity in Colombia, and questions whether the market can absorb that growth.