CAPA Latin America Aviation & LCCs Summit

Airline Keynote and Q&A: American Airlines, SVP International & Cargo, Jim Butler

CAPA – Centre for Aviation, Advisor, John Thomas in conversation with Avianca, CEO, Hernán Rincón

Viva Air, President & CEO, Felix Antelo

ALTA Executive Director Luis Felipe de Oliverira outlines the association’s priorities for 2019, its efforts to help government stakeholders understand the value of aviation and the effects of elections in Chile, Brazil, Mexico and Colombia in the region.

Azul’s chief revenue officer Abhi Shah discusses corporate demand in Brazil, the airline’s performance on long haul routes and offers an update on the airline’s efforts to forge a JV with United. He also provides insight into Azul’s plans to replace its older E-Jets.

General Leader of Colombian LCC Wingo Catalina Breton discusses network opportunities, and the airline’s performance at Panama Pacifico airport. Ms Breton also states Wingo’s load factor is 86% across its network, and even though the airline’s financial performance is not broken out separately, Wingo should post a positive margin performance by the end of year.

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.

Skyscanner’s senior commercial director Hugh Aitken discusses the importance of the recent agreement with Avianca to leverage IATA’s NDC for direct bookings through Skyscanner, and how airlines need to think about branded storefronts outside their own booking platforms. He also discusses the adoption of AI and Chatbots by airlines, and the opportunities those new technologies offer to the airline industry.

Plusgrade VP of Business Development Mike King talks about the bidding model for upgrades and the healthy appetite customers have for that process, and how airlines can possibly benefit from a mix of bidding and fixed price components for upgrades. He also discusses opportunities airlines have for expanding merchandising upgrades.

The CEO of Chile’s second largest airline Sky talks about changes in the country’s domestic market and the company’s move into the Peru, concluding only 5% of Peru’s local industry has the LCC model. He also discusses the need to differentiate taxes on long and short haul flights.

Neil Chernoff, SVP of Network Planning and Alliances for Iberia talks about the Chilean approval process for the proposed IAG-LATAM JV, offers insight into a planned JV between Air France and Air Europa and the potential threat of long haul LCCs between Europe and Latin America.

CEO of LATAM Airlines Colombia Santiago Alvarez offers perspective on increasing competitive capacity in Colombia’s domestic market and demand within the country. He also explains LATAM Airlines Colombia could grow its domestic market share during the next few years to 24% to 30%.

Gol’s chief planning officer Celso Ferrer offers insight into the corporate market in Brazil, and discusses GOL’s operation of the 737 Max and the network opportunities the aircraft provides.

William Shaw, CEO of LCC upstart Flycana provides an update on the airline’s launch in the Dominican Republic and the opportunity to create a low cost carrier in the Caribbean. He also says the A320neo in a 180-seat configuration appears to the right sized aircraft for “the low cost airline we want to start in the Dominican Republic”.

Deutsche Bank’s managing director Michael Linenberg talks about factor affecting Latin airline profitability in 2018, how trade disputes could create instability in currency markets, the capacity outlook for Latin American markets and the opportunities for emerging LCCs in the region.

James McBride, Boeing’s managing director of marketing expresses optimism over gaining approval for the company’s JV with Embraer, highlights upcoming markets for Max deployment and Boeing’s forecast for aircraft deployment in Latin America.

Latin American flag carriers have often suffered from the dominance of foreign airlines in key markets. US airlines, notably, have secured significant equity holdings and partnerships, in attempting to subdue some of the more difficult elements of competition. This has been possible as several key Latin American countries, such as Mexico, Brazil, Chile and now Argentina have adopted relatively liberal aviation policies. Ownership and control and foreign equity ownership have been significantly relaxed in several cases. Only a small number of states including those of central America have resisted this trend.As the main Latin economies emerge from the difficult times they have experienced in this decade, there is the potential for foreign airlines to establish even stronger ties.

• How do limits on open skies and infrastructure constraints inhibit growth?
• Are Latin American governments likely to pursue liberal market regimes, including market access and foreign ownership?
• What’s the appetite for foreign investment in Latin American airlines, and what is the reality that some of the more restrictive foreign ownership laws could change?
• Are more cross border equity investments likely as partnerships evolve?
• Are there opportunities for multilateral liberalisation that would benefit foreign airlines?
• Which markets are underserved and have the most potential?
• How can the region’s airlines better compete and capture their fair share on Latin America’s growing air routes?
• Will Latin American carriers grow their capacity share on intercontinental routes or will foreign carriers continue to dominate?

Moderator: Deutsche Bank, Managing Director, Michael Linenberg
Panel Members:

• Azul, Chief Revenue Officer, Abhi Shah
• United Airlines, SVP – Alliances, John Gebo
• Viva Air, Chief Legal Officer, Abel Lopez Campo

• What will be the next air services links?
• What are the trade opportunities underpinning these new routes?
• What can Latin America markets do to entice more inbound travel from China and Asia?
• How are carriers utilising new fuel efficient aircraft to unlock network connectivity between Asia and Latin America?
• Will traditional hubs over Europe/Middle East/Africa continue to play a role in linking Asia with Latin America?
• What are the prospects for capacity growth from Asia into lower South America?
• Is through transit and more fifth freedom rights possible for Asian airlines wishing to serve Latin America via intermediate points in North America?
• Are Asian and Latin American carriers making the most of alliance and codeshares to expand network coverage?

• Iberia, SVP, Network Planning & Alliances, Neil Chernoff
• The Boeing Company, Managing Director – Marketing, James McBride

• Reviewing the core markets of Brazil, Peru, Chile, Colombia, Argentina and Mexico and prospects for growth
• Will an operating utopia ever be within reach for the region’s airlines or will infrastructure constraints and high taxes impede growth?
• Will pan regional brands come to dominate the competitive landscape?
• What is the current state of play of JVs and alliances among the region’s larger airlines and how effective is it as a mechanism for bolstering network coverage?
• Can Latin American carriers learn from their global counterparts and launch low cost subsidiaries to avoid ceding market share to LCC competitors?
• What else must they do to defend against LCC market incursions? How to bring Latin American taxes and charges in line with international best practice?

• Aerocivil, Director, Juan Carlos Salazar
• Azul, Chief Revenue Officer, Abhi Shah
• IATA, Regional VP, The Americas, Peter Cerdá
• LATAM Airlines Colombia, CEO, Santiago Alvarez

• What are the prospects for air service expansion on the crucial North-South axis?
• How is technology influencing network planning on North-South markets?
• Which hubs will be the winners?
• Are US ULCCs or Latin America LCCs set to usurp the dominance of the US majors in this arena?

• Airbus, VP of Marketing Latin America & Caribbean, Paul Moultrie
• IATA, Regional VP, The Americas, Peter Cerdá
• The Boeing Company, Managing Director – Marketing, James McBride

• How does airline.com compete in the era of conversational converse and new mobile, bot and voice technologies? Are there other distribution channels which airlines are underutilising?
• Is this increasingly fragmented and complex commercial and technological distribution landscape sustainable? How will business models evolve in response? Is there a need for a direct connect aggregator?
• Should airlines build lots of direct connects or revert back to lean, centralised distribution channels?
• Who is going to be offering services to bridge the gap between airlines/aggregators that are NDC compliant and those that aren’t? Will it be the GDS and IT providers, other airlines or speciality providers?
• How are newer intermediaries adding value to airline distribution?

• Amadeus, Executive Vice President, Head of Americas, Amadeus Airlines, Elena Avila
• Avianca, Executive Vice President, Silvia Mosquera
• IATA, Regional Director, Financial & Distribution Services, The Americas, Alicia Lines
• Skyscanner, Senior Director, Commercial, Hugh Aitken

• Where are Latin American carriers in this process, and what is the reception for product unbundling in Latin America?
• Is the merchandising and sales capability at an optimal standard to enable proper product unbundling?
• Is product unbundling sustainable in the long term?
• Have the network carriers been able to achieve any corresponding reduction in unit costs?
• Do passengers understand the product attributes, or lack thereof, associated with tiered fares?
• What are the expected ancillary revenue gains given the historically low penetration rate of ancillary sales in the region?

• Amadeus, VP Airline Commercial, Victoria Huertas
• LATAM Airlines Colombia, CEO, Santiago Alvarez
• Lufthansa Group, VP Airline Sales, The Americas, Tamur Goudarzi Pour
• Plusgrade, VP Business Development, Mike King