Colombia

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-Sky tie-up and LAN-TAM alliance selection could lead to further consolidation in LatAm

The rivalry in Latin America between leading airline groups LATAM and Avianca-TACA has increased another notch following the establishment of a new alliance between Avianca-TACA and Chilean carrier Sky Airline. While relatively small, the tie-up forged this week between leading Colombian carrier Avianca and Sky could be a precursor to further consolidation in the region. Such consolidation will almost certainly follow alliance lines as LATAM, which will be formally established in late 1Q2012 once LAN and TAM complete their merger, is poised to opt for oneworld while Avianca-TACA is now in the process of joining Star Alliance.

VivaColombia prepares for 2Q2012 launch as Irelandia ponders pan-Latin American LCC network

Low-cost carrier start-up VivaColombia has adjusted its business plan ahead of its planned May-2012 launch and will focus primarily on stimulating demand on thin domestic routes. VivaColombia has selected Medellin as its base and is in the process of leasing an initial fleet of five A320s, having decided against pursuing fleet synergies with Mexican sister carrier and B737 operator VivaAerobus.

The Colombian carrier, which was provisionally known as La Nueva Aerolinea (LNA) until early this year when investment from VivaAerobus owners Irelandia and IAMSA was secured, had an initial business plan that envisioned sticking to trunk routes from a Bogota base. LNA was initially established over two years ago by four Colombian entrepreneurs, led by former Avianca CEO Juan Emilio Posada. It was initially awarded traffic rights last year for six domestic trunk routes. The cross-ownership in Mexican and Colombian carriers could be the early stages of a Viva-branded pan-Latin American LCC.

LAN outlook brightens as strong 3Q2011 earnings are recorded and as merger with TAM nears

Latin American airline group LAN has reported a significant improvement in its third quarter earnings following a surprisingly weak second quarter. Latin America’s buoyant economy drove the strong showing and has LAN confident it can remain highly profitable in 4Q2011 and 2012 despite the challenging global market conditions. LAN’s planned merger with Brazil’s TAM, which will now almost certainly be completed in Mar-2012, further improves the group’s medium to long-term outlook as LAN gains access to Brazil, the region’s largest economy by a wide margin and one of the world’s largest emerging markets.

UPDATE: oneworld favoured with more at stake than Star in LAN-TAM alliance decision

(this article, which was initially published on 24-Sep-2011, has been updated to include initial LAN response, further discussion of TDLC measures and implications for Gol and SkyTeam)

The stage is set for the biggest global alliance selection of the decade as new airline group LATAM is being forced by Chile's anti-trust court to choose a single grouping. The decision by LATAM, the new parent company for oneworld’s LAN and Star’s TAM, will have huge ramifications as the winning alliance will be guaranteed a leading position in the fast-growing and increasingly important Latin American market. The more likely outcome is a oneworld victory, which would result in its share of capacity in the region increasing to 30% compared to approximately 15% for Star and 11% for SkyTeam.

In conversation with Spirit Airlines CEO Ben Baldanza

Spirit Airlines has proven there is room in the mature US market for a new model and unusual network strategy.