Page 1 of 1

Possible LCC In Central America?

Posted: Thu Aug 16, 2012 2:27 pm
by avi8
So I was wondering if anyone thinks it's feasible for a LCC to innitiate operations in Central America. All of this is hypothetical of course. A LCC would bring nothing but benefits to the region as the prices are ridicolous. An average intra-central american flight costs about 350-400$. All of this for a 50 minutes to 1:15 minute flight?

I wonder if anyone could give a hypothetical insight into a possible launch.

RE: Possible LCC In Central America?

Posted: Thu Aug 16, 2012 2:53 pm
by rfields5421
My question is what could a new airline do to lower costs.

What is the level of cabin service, what is the level of terminal services, what is the level of customer service with the airlines already operating in the area?

An LCC works because they offer less service in the cabin, they offer less check-in and baggage handling service, they offer fewer personal contacts in the booking process and other processes than their carriers.

My understanding, which may be flawed, is that the airlines operating in that region provide a lower cost level of service as compared to 'traditional full service' airlines.

That is how LCC airlines offer lower fares - by giving their customers a lower level of service, and by making the prices low enough to create a demand for air travel at a high level.

I'm not sure there is enough room to lower costs in the region, nor am I sure there are enough people with disposable income to add to the passenger numbers to make a new LCC worthwhile.

One issue I could see is documentation. The ranges are short in the region and often involve crossing borders.

How easy is it for people to get passports in the region? I would think a high percentage of the upper and upper-middle class have passports - but what about average level workers. Do they have passports? Is crossing borders easy for them?

Lastly - what type of fees do the various governments have for passenger travel? Often international travelers are a easy source of extra income with high arrival and departure fees/ taxes.

RE: Possible LCC In Central America?

Posted: Thu Aug 16, 2012 3:23 pm
by A388
Quoting avi8 (Thread starter):
I wonder if anyone could give a hypothetical insight into a possible launch.

I read on another thread that the new Colombian low cost airline Viva Colombia has customers who are not satisfied because they are not used to the low cost concept of travel such as paying for luggage on board etc. so I think the low cost idea will need time to get familiarized among the people in Central and South America.

A388

RE: Possible LCC In Central America?

Posted: Thu Aug 16, 2012 6:25 pm
by MEA-707
Just any competition will force down prices.
It is not only the lower costs like cutting meals and free luggage which made Ryanair and easyJet successful in Europe but especially disturbing up the duopolies between many routes. For years, KLM and SAS decided an AMS-CPH flight would cost say 550 euro.
The same is still going on in Central America. COPA and TACA can just charge whatever they want as there is no competitor who can undercut them.

RE: Possible LCC In Central America?

Posted: Tue Aug 21, 2012 9:36 am
by bjorn14
Just anectdotal but I've noticed that a lot of pax in developing countries have a lot of baggage. That would certainly cost them more in a U/LCC model.

Another concern I would have is how would the home governments react. Are they going to protect CM & AV til the death?

RE: Possible LCC In Central America?

Posted: Thu Aug 23, 2012 12:58 am
by juanchito
Quoting rfields5421 (Reply 1):
One issue I could see is documentation. The ranges are short in the region and often involve crossing borders.

You can travel by air between CA4 (Guatemala, Honduras, El Salvador and Nicaragua) with you personal document (everybody 18+ must have one), no need for passports.

Quoting rfields5421 (Reply 1):
How easy is it for people to get passports in the region? I would think a high percentage of the upper and upper-middle class have passports - but what about average level workers. Do they have passports? Is crossing borders easy for them?

In Guatemala the cost of a passport is $30.00 for a 5 year document. Don't know about other countries but I think prices are of them are in the same range of prices.

Quoting rfields5421 (Reply 1):
What is the level of cabin service, what is the level of terminal services, what is the level of
customer service with the airlines already operating in the area?

Cabin service from CM and TA is a regular service, flights that are 30 minutes or less Flight Attendants don't even passes peanuts and beverages. Longer flights they will pass a small beverage and a small meal on both airlines. CM doesn't even have IFE on Central American Routes, only when the 737-800 operates the route. But non of the 737-700 and E190 have IFE. Taca has IFE and has a schedule program depending the flight. Only E190 have personal IFE.

Terminal Service, almost all airport have free WIFI access and overall average terminal services.

Quoting rfields5421 (Reply 1):
Lastly - what type of fees do the various governments have for passenger travel? Often international travelers are a easy source of extra income with high arrival and departure fees/ taxes.

There is a plan from the goverments that Central American flight should be treated like local flights, that means less taxes but it is a plan yet.

Quoting bjorn14 (Reply 4):
Just anectdotal but I've noticed that a lot of pax in developing countries have a lot of baggage. That would certainly cost them more in a U/LCC model.

Most of the passangers traveling with 2 luggages como from the US. Inner central american flight usually are only a carry on bag plus 1 check bag.

Quoting bjorn14 (Reply 4):
Another concern I would have is how would the home governments react. Are they going to protect CM & AV til the death?

The goverments have always protected TA.


Juanchito

RE: Possible LCC In Central America?

Posted: Thu Aug 23, 2012 2:21 am
by oneskyjet
COPA IS a low cost airline. What you're talking about is a low FARE airline which COPA also is where it needs to be such as connecting US cities with deep South America cities via PTY. Between TA and CM Central American O+Ds are pretty well served albeit with higher yields. If a new entrant tried to come in and poach their markets with low fares, I'm pretty sure that that they would be matched and ultimately crushed.

RE: Possible LCC In Central America?

Posted: Thu Aug 23, 2012 3:55 am
by tguman
There is also the fact that the roads in Central America are being improved, reducing driving times. In 2005 you could take a "luxury" bus from TGU to SJO in a day for around $50USD. For $35USD you could spread it out over two days.

Another reason is driving oneself across these borders as well. Now, aside from gas, your looking at paying just the border fees ($3-$5 US) per person, per border. TGU to MGA is now a little over 6 hours by car. Till you check-in, go through security, board, fly 35 minutes, disembark, baggage pickup, your looking at 2 to 3 hours (if a TGU-MGA flight even existed using a jet)

Leisure travel in Central America, ends up being by bus or by car. Flying is for trips to the States.

TGUman