Avianca reportedly plans to invest USD7.2 million to purchase an 80% stake in Ecuador’s Aerolineas Galapagos SA Aerogal while Kingsland Holding Limited will purchase the remaining 20% stake (Dow Jones, 26-Feb-2010).
Avianca to invest USD7.2 million in Ecuador’s Aerogal
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The Viva Group settles on Peru amid changing competitive dynamics in Latin America
Peru has emerged as the country of choice for the third airline of the Viva Group, which aims to launch its Viva Air Peru during the first half of 2017. In the past Viva has toyed with the idea of spreading its low cost brand to Peru, but chose to pursue an opportunity in Costa Rica that it later abandoned due to the high operating costs imposed on the country’s airlines.
Peru has numerous attractive attributes for a low cost start-up, including favourable economic growth, the absence of a true low cost airline and strong domestic passenger demand. Trips per capita for Peru are similar to the still-developing (and growing) markets of Mexico and Brazil, which each feature low cost competitors.
But the current iteration of the Viva franchise faces some changing dynamics in the Latin American market place – primarily the recognition by the region’s largest airline groups of the LCC threat, and their adoption of new tools to compete more effectively with existing and aspiring LCCs.
LATAM Airlines Group is the latest in the region to build an arsenal to combat the LCC threat
LATAM Airlines Group is taking a major step to sustain its leadership in Latin America through the introduction of a new fare structure on domestic routes in its South American domestic markets. This move is to ensure that it remains competitive as existing and potential new low cost airlines aim to establish a foothold in the region.
The company’s plans emerged just as Copa Airlines decided to transition its Colombian operations to a low cost model – Wingo – and the Viva Group set its sights on launching its third Latin American low cost airline in Peru during early 2017. Airlines within LATAM have leading positions within those countries. Over the long term LATAM expects rapid leisure passenger growth in Latin America, and is establishing a framework to compete for those customers.
Key to LATAM’s execution of its new fare structure is cost efficiency, and the airline has cited several ways to achieve lower costs – including the expansion of direct sales, improved productivity and a marked increase in aircraft utilisation – in order to attain unit costs to compete with new low cost competitors.