Bogota Eldorado International Airport

Houston airport operator envisions Hobby offering international flights in 12 markets

Studies carried out on behalf of the Houston Airport System (HAS) to examine the viability of international flights from Houston Hobby airport contemplate a two-phased introduction of 12 markets to Mexico and Central America. Southwest Airlines is pushing for facilities at Hobby to support international flights, but research conducted shows that Mexican low cost carriers VivaAerobus and Volaris would also have an interest to operate international service from Hobby. It is not surprising United has mounted vehement opposition to Southwest’s campaign, as it enjoys majority carrier status in most of those markets with its service offerings from Houston Intercontinental Airport.

Earlier this year Southwest asked Houston Airport System (HAS) to conduct a feasibility study for the addition of a five-gate terminal at Houston Hobby Airport to support international flights. Houston is Southwest’s sixth largest city based on daily departures, and the city’s geographical location makes it an ideal destination for short-haul international flights to Mexico and Central and South America. Data in the study conducted on behalf of HAS show that Houston was the point of entry for 64% of Mexican visitors travelling by air to the US in 2010. Through its acquisition of AirTran, previously domestic-only Southwest is gaining knowledge of international operations now that it is managing AirTran’s network, which includes flights to the Caribbean and Central America.

Key decisions loom in 2012 for Avianca-TACA as integration effort nears completion

The spotlight in Latin America this year will primarily be shone on LAN and TAM as the two airline groups complete their landmark merger and begin the integration process. But it is also a key year for Avianca-TACA, which completed their merger in early 2010 and has completed about 90% of its integration process.

The integration of Avianca and TACA will be wrapped up this year as the carrier formally joins the Star Alliance, completing two major milestones for the fast-expanding airline group. Several major decisions also loom for the group in 2012 related to its corporate structure, branding and fleet.

Structurally, a decision will likely be made by the end of this year on whether to bring Avianca Brazil into the publicly traded holding company Avianca-TACA. The Brazilian carrier is still owned by the Synergy Group, the holding company controlled by the Efromovich family which also owned Avianca prior to its merger with TACA (the Efromovich family now has a majority share in Avianca-TACA Holding). As a result, Avianca Brazil remains separate although it has a co-branding arrangement with Colombia-based Avianca.

Avianca benefits in Colombia from restructuring at new LAN subsidiary Aires

Avianca has been the main beneficiary of the restructuring at Colombian-low cost carrier Aires, growing its share of the domestic market and improving its profitability since LAN acquired Aires late last year. Avianca also has benefitted from capacity reductions by the other two main players in Colombia’s domestic market, Copa Colombia and Satena.

Profitability in Brazilian domestic market plummets as yields drop

Intense competition in the Brazilian domestic market led to a sharp drop in yields in 2Q2011 and is expected to have a major impact on profitability throughout the Brazilian airline sector for the remainder of the year. Gol, which is primarily a domestic operator, has particularly been impacted by the suddenly unfavourable market conditions with a BRL359 million (USD221 million) net loss incurred in 2Q2011. TAM also has been impacted but has the benefit of a large profitable international operation, allowing it to remain in the black in 2Q2011.

Avianca-TACA enjoys profitable first year as merged entity

Avianca-TACA is confident of a successful debut on the Colombian stock exchange after a profitable first year as Latin America’s fourth largest airline group. Colombia-based Avianca and El Salvador-based TACA completed their historic merger in early 2010, creating the fourth largest airline group in Latin America after LAN, TAM and Gol.