Indigo Partners Update
Indigo Partners Managing Partner William Franke discusses Chilean ULCC JetSMART as the airline reaches its one-year milestone, Argentina’s potential, conditions in the US market and an update on Frontier Airlines, including its planned codeshare with Mexican ULCC Volaris.
Transcript
William FrankeJetSmart is an airline that we started up in Chile, and based in Santiago, Chile, late July of last year. It is currently flying within Chile. Chile's a long thin country and underserved in many aspects, so we've been focused on getting our legs under us, so to speak, while we fly within the country. We recently started flying from Santiago to Lima, Peru, and that's been a terrific success so far.
A lot of people like Argentina right now. You've seen Flybondi, Norwegian, one of the Avionco shareholders just started an airline there. I worry that there may be too much exuberance in advance of the opportunity, but we think Argentina longer term is an important market if you're a Latin American airline. The politics have been difficult for a number of years. You have a new administration, which has been very pro business and focused on foreign directed investments. We'll talk a hard look at Argentina.
A lot of airlines have orders in front of them and there's been a number of announcements about the increased capacity in certain US major hubs. Certainly, our friends at United have been aggressive in talking about growth plans. Now that said, the market has so far been able to absorb the growth that's been identified and you're seeing in early days, but some recovery in the revenue by the major airlines, which is an important focus in terms of the rest of us in the marketplace. Have to keep in mind that the low cost, ultra low cost airlines only occupied by the six or 7% of the domestic market, so we really need to see what the majors are doing in any particular time.
Frontier is interesting. When we acquired Frontier in December 2013, it was heavily focused on Denver. It was a Denver centric airline and we have worked hard to spread its network to communities that need it the flying and that's worked well for us and you can expect to see the airline continue to branch out. It has a significant order book in front of it over the next five years and we think it's going to be a very successful carrier. So far, the results have been remarkable from our perspective.
We think you have to look at all sorts of opportunities across the low cost network. We viewed Volaris and Frontier as natural codeshare partners because of geography. Both fly each other's markets to some extent, so this is an opportunity to try the idea of a codeshare between ultra low cost carriers to see whether it works. We like to work with our portfolio airlines to look at opportunities to support one another. The recent airbus order is a good example of that.
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