PLUNA

Yanking of Jazz Thomas Cook contract underscores ever-growing difficulty in regional airlines

A decision by travel package operator Thomas Cook to end a five-year charter agreement three years early with Canada’s Jazz Aviation reflects the stark realities regional carriers face in attempting to meaningfully diversify their core business of providing feed to network legacy airlines.

While Thomas Cook ended the deal due to souring demand, it leaves Jazz again with just one client, Air Canada. Tensions between Jazz and Air Canada have flared over a dispute on rates paid to Jazz that could result in the regional carrier having to pay its partner CAD26 million (USD26.2 million) if an arbitrator later this year rules in Air Canada’s favour.

Paraguay beckons for bold airport investors

The Government of Paraguay has passed a bill to concession out the Asunción Silvio Pettirossi Airport, along with several of the country's regional airports. If approved by Paraguayan President Fernando Lugo, the 30-year concession will require an estimated USD100 million investment, which seems to be a lot of money for a country that has widely been regarded as something of a backwater in Latin America.

Local unions are vehemently opposed to the concession and about 2,000 unionised airport workers are now planning to wage a 10-day strike at Asunción Airport. The strike is expected to start at end of this week and result in widespread delays and cancellations.

Paraguay is one of only two landlocked countries in South America, surrounded by Brazil, Argentina and Bolivia. It famously fought Brazil, Argentina and Uruguay between 1864 and 1879 in The War of the Triple Alliance, leaving Paraguay with a population of only 200,000 and economic stagnation that lasted half a century. But Paraguay has undergone something of a political resurgence since the 35-year military dictatorship of Alfredo Stroessner came to an end in 1989, allowing for regular democratic presidential elections.

Chorus Aviation (formerly Jazz Air Income Fund) net jumps 35.8%

In its first earnings report since its corporate conversion to Chorus Aviation - formerly Jazz Air Income Fund - posted a 35.78% increase in year-end net income bringing in CAD125.8 million. However, ex special items related to its corporate conversion, the company’s net was CAD55 million.

Hard to keep up with Latin American changes, next consolidation wave on the way

While 2009 was a hot year for the Latin American market, 2010 has followed suit with more acquisitions, partnerships and mergers as airline holding companies and alliances jockey for position to become the 900-pound gorillas on the continent. It is unlikely the pace will stop any time soon. Watch for more consolidation along the Brazil-Colombia-Mexico axis.