A Decision For The Third Viva Airline In South America Should Occur In The Next 12 To 24 Months
Viva Air President and CEO Felix Antelo discusses changes in the Peruvian market including Sky Airlines’ plans to launch a new airline in the country, and offers insight into Viva Air Peru’s performance after roughly a year of operations. Mr Antelo also talks about Colombia’s domestic market and Viva’s decision to establish a base in Santa Marta. The Viva Group is also looking at branching out into a third country in Latin America, and could make a decision about establishing a third franchise during the next 12 to 24 months.
Transcript
Felix Antelo:Well, Peru is a very— I mean, it's probably the most competitive market right now in South America besides Brazil. There are 6 competitors for 11 million passengers, so that's quite a lot when you compare to other markets. I think that Sky Sky's arrival will bring more competition and more pressure basically to the minor or smaller competitors. And I don't know, I cannot tell you what's going to be like the competitive landscape in 6 to 12 months, but I can assure you that there will be some different, that not everyone will be standing in 6 to 12 months. Period. Yeah, we've been in Peru, as you say, for 15 months now. It wasn't an easy start. It's a, as we were talking, very competitive market. We've been having great news over the last, I would say, 3 to 4 months. Improved our load factors. We're around 85% right now, load factor on average. Been very successful to Cusco, Iquitos routes. We've just announced 3 new domestic routes for November and December, Jaén, Talara, and Chiclayo, and 2 international routes, 2 new routes from Lima to Bogotá and from Lima to Medellín. So we are in a good, I would say, in a good trend. We've changed and completed a new team, a commercial team, a new operations team. We got a new, I think, CEO in Peru since January of this year. So all in all, I would say we're doing good. We still have room to improve, I won't lie to you, but we're in a very good trend and we'll finish the year in a much better shape than the way we started this year. In Colombia, up until now, we had 2 bases of operation, Medellín, the first one, and Bogotá, the second one. We think it's time for us to diversify, and that's why we chose Santa Marta, because we see Santa Marta as a booming destination from the touristic point of view. But also we had the support of the local airport and the local government with some incentives and some breaks. So we found that to be very useful for our model. And we see an opportunity in the international route to Miami to support the growth of our operation there. We'll start with 2 aircraft from October onwards, hoping to get there to 4 aircraft by mid-2019. It is in our plans, but I would say the IPO should be a consequence of a well-run and well-administrated business. It's not an objective in itself. It will be a consequence if we do things right. We have to grow the business here in Colombia and make it even more profitable. We were talking about Santa Marta, Medellín, Bogotá. We're going to grow aggressively here in Colombia and we're seeing good numbers. We have to stabilize Peru. As we were saying, we need a profitable operation in Peru too. And if we do those 2 things in the correct way, we'll probably have space for a 3rd country in the coming, I would say, 12 to 24 months. We're looking at a 3rd country. And if we do all of the above in a correct way, we think that an IPO would be a nice way of giving a continuity to our I mean, to be realistic, I would say between 15 and 24 months. That would be an adequate timeline for a 3rd country for Viva. To be honest, we are studying more than one. There are a couple of, I would say, pretty obvious ones that we are kind of ruling out. Brazil, because it's a whole new game and a different, you know, even continent in itself. And Venezuela due to its political and economic problems. But besides from that, we were studying, everything is on the table and we'll probably have a decision, I would say, over the next 6 months. And from there, you know that starting a new operation takes time. You got to get the AOC, you got to hire the people, you got to get the pilots. But I cannot tell you which country, but it will definitely be One that's very, very close to our Andean region.
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