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Gonzalo
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 1:14 am

North America, Europe, Asia, Oceanía, every continent in the World has its own LCC industry, with some of the most succesful and representative airlines of the LCC model ( Southwest in the US, FR and EY in Europe, just to mention a couple of examples )..... But there is nothing like a LCC serving or conecting South America, G3 could be the closest thing but not exactly a continental player....

Why ? Thoughs ?

Rgds.
G.
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Polot
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 1:18 am

To have to have a successful continental LCC you need open skies and low barriers of entry with little governmental interferences. South America doesn't have that yet. It is the same reason why Africa really doesn't have a successful continental LCC.

[Edited 2013-12-10 17:19:45]
 
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qf2220
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 2:17 am

Quoting Polot (Reply 1):

Seconded. The market here if liberalised could support much more air travel than there currently is IMHO. THat goes for all industries really, there is still much protection of big business in S America from my perspective.
 
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reffado
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 2:31 am

It's hard to have a competitive LCC when many countries focus on protectionist measures. Once the left-oriented governments start going away, we may see this happening. But not any time soon.
 
2travel2know2
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 2:48 am

The closest South America has to LCC airlines are in Colombia: EasyFly EF and Viva Colombia 5Z.
I'd expect CM to eventually study developing a PTY night-hub operation with discounted air-fares and (almost) no-frills flights.
I'm not on CM's payroll.
 
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ODwyerPW
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 3:12 am

In Mexico we have Volaris and VivaAerobus.
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AR385
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 4:43 am

VivaAerobús and VivaColombia are going to get there eventually. It´s in their plans anyway, using BOG, MEX and CUN as hubs. I don´t know how succesful an LCC can be on sectors of 6-8 hrs. but it might be worth a try.
 
SCL767
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 4:58 am

Quoting AR385 (Reply 6):
VivaColombia are going to get there eventually. It´s in their plans anyway, using BOG, MEX and CUN as hubs.

VivaColombia's "hub" is Medellín-Córdova. VivaColombia operates less than 9 daily flights into BOG...
 
AR385
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 5:01 am

Quoting SCL767 (Reply 7):
VivaColombia's "hub" is Medellín-Córdova. VivaColombia operates less than 9 daily flights into BOG...

Notice I wrote:

Quoting AR385 (Reply 6):
VivaAerobús and VivaColombia are going to get there eventually

EVENTUALLY, being the key word. One thing these airlines are is flexible. If it suits VivaColombia, it will move its hub to BOG.
 
SCL767
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 5:10 am

Quoting AR385 (Reply 8):
EVENTUALLY, being the key word. One thing these airlines are is flexible. If it suits VivaColombia, it will move its hub to BOG.

VivaColombia may be flexible; however the significant capacity constraints at BOG are increasing even though BOG has shiny new terminals. BOG does not suit VivaColombia's growth plans, that's why they decided to be based at Medellín. Interesting to note that VivaColombia's fleet growth has been stagnant since entering the Colombian domestic market...
 
Avianca
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 6:12 am

Quoting SCL767 (Reply 9):
Interesting to note that VivaColombia's fleet growth has been stagnant since entering the Colombian domestic market...

but obtaining a quite decent market share and opening new markets..... not only the fleet growth is the key... also the frequency and payloads...

cheers
Avianca
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 8:21 am

Quoting 2travel2know2 (Reply 4):
EasyFly EF

Certainly not: it has 29-seat Jetstream 41s. These will have high CASM and high seat costs. I also can't imagine that the airline's aircraft are particularly productive. No doubt its operational costs are pretty high.
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TYCOON
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 9:14 am

Brazil has AZUL... I would put them in the LCC category.
 
Summa767
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 12:25 pm

Quoting SCL767 (Reply 9):
Interesting to note that VivaColombia's fleet growth has been stagnant since entering the Colombian domestic market...

Viva's entry into the Colombian market has had a hugely benefitial effect on domestic air traffic growth that is still being felt. Far from stagnant, airports such as MDE, CTG, SMR have seen surges that still continue. MDE gained 1m pax in 2012 and will have finished with a million more over that in 2013.

Not all is due to Viva, but it is Viva that triggered a substantia response by Avianca with a consequent cumulative effect.

Of course, this aggressive competitive environment means that Viva will have to dig deeper into its investors pockets, as a profitable operation will take a while to be achieved.
Same situation for LAN Colombia that continues to haemorrage money.

Just today there is an interview in El Colombiano newspaper with Declan Ryan, representative of Irlandia -one of the investors in Viva- in which he mantains an aim for 50 airplanes in the longer the longer term and hints at imminent news on fleet additions in the fleet.
Mr Ryan is currently in Medellin for a board meeting.

http://www.elcolombiano.com/BancoCon..._para_llegar_a_mexico_y_panama.asp
 
eastern023
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 12:29 pm

Aren't GOL and Azul both LCC? Brazil is a Latam country.
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Gonzalo
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 2:40 pm

Quoting eastern023 (Reply 14):
Aren't GOL and Azul both LCC? Brazil is a Latam country.

I was thinking in this :

Quoting Gonzalo (Thread starter):
But there is nothing like a LCC serving or conecting South America, G3 could be the closest thing but not exactly a continental player....

Azul and Gol are probably LCC but can't be compared, for example, to Ryanair or Easyjet, who basically cover every significant destination across Europe. Maybe that could change in the future when all the leftist, protectionist governments finally fail and the things change to a more "competition-friendly policy".

Rgds.
G.

[Edited 2013-12-11 07:39:41]
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jfk777
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 2:48 pm

GOL is huge in Latin America.
 
Skisandy
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 3:44 pm

GOL is huge, but not a low fare carrier.
It is not enough to say you have the lowest fares, when you in reality do not have the lowest fares..
TAM is lower priced than GOL about 80 percent of the time, when I look for a domestic flight within Brazil.
 
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ODwyerPW
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 4:27 pm

RyanAir and EasyJet are exceptional (in terms of what they've accomplished, not necessarily their product.).
You cannot compare SouthWest to them.
Why? Because Southwest has merely managed to dominate one country; the United States.
It does not fly it's own metal in Mexico, Canada or nor the other Central American countries.
Central America is physically part of the North American Continent.

Therefore SouthWest has not dominated North America in the same fashion that RyanAir has dominated Europe.
SouthWest has dominated the United States, one country.
The United States spans the continent of North America, but is not all of North America.
In much the same way, GOL and AZUL dominate Brazil, or Volaris and VivaAeroBus dominate Mexico.
By that definition, Latin America countries have thier own LLC.

We are beginning to see some cooperation between Volaris and SouthWest.
Imagine if WestJet of Canada participated with them.
You'd then have a unified LLC structure serving MOST of North America.

What is disappointing about Central America is that so many of the other countries don't cooperate/particpate in the regional economy.
Costa Rica has unparalled natural beauty that is well managed and promoted through eco tourism.
Panama reaps the bounty of the canal.
Tourism in Latin America is largely European.
Visitors don't travel throughout Central American countries the way you do Europe.
If I travel from the USA to Italy, I'm going to defintiely book a few flights to France, Germany, Spain and/or Austria.
When you fly into San Jose Costa Rica, you aren't necesarily looking to explore Managua and Guatamala City.

South America (also latam) is surprising.
One would imagine that a carrier like GOL would have more routes to some of the other countries on the continent.
It dominates Brazil, has a few destinations in Argentina, and the odd one in Venezuela, Guyana, Bolivia and Uraguay.
But nothing in Colombia, Ecuador, Peru or Chile.
Still, GOL covers a fair amount of the continent.
It's safe to say South America has a strong LLC presence with GOL.
It will only get stronger as they strike agreements with more of the countries on the Western and Northern fringes of the continent.
Azul on the otherhand dominates only Brazil, much the same way a SouthWest dominates only the United States.

There is such a disparity in the economies of the Latin American Countries (both Central and Southern).
Sure that plays a role in the comercial viability of attempting to cover everything throughout the land.
The LLCs that exist there now are going where the money is.
I imagine Lima and Santiago may be exceptions, Surely the LLCs would like to fly there.

[Edited 2013-12-11 08:34:03]

[Edited 2013-12-11 08:34:23]
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Wayfarer515
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 5:37 pm

Funny how some here put the blame on the Leftist governments in LATAM, as if before them the market was any better in shape or form.

If something can be said about these governments is that trade and tourism has increased among countries in Latin America. Plenty of free trade and political agreements such as Mercosur, ALBA, etc. can be mentioned to support this.

Protectionism to the oligarchies tend to come from the right wing and not the left wing governments. Perfect examples of this are LAN in Chile and TACA in Central America, where they have been protected to the point of basically erasing any possible competition.

So stop putting the blame on the governments, protectionism is the norm in the aviation industry in whole Latin America, and the governments have acted as allies of these monopolies stifling any chance of competition.

When will LATAM get its LCC carrier? When open skies agreements similar to those in Europe take place, but with hopefully different protagonists and not the same carriers that have killed their competition through their friends in the puppet governments.

My 2 cents.
 
United1689
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 8:04 pm

Quoting Gonzalo (Thread starter):
G3 could be the closest thing but not exactly a continental player....
Quoting jfk777 (Reply 16):
GOL is huge in Latin America.

No, only in Brazil. I believe they only have 16 or so international destinations.

Quoting odwyerpw (Reply 18):
It's safe to say South America has a strong LLC presence with GOL.

No, it's not. G3 is in no way an LCC. They try to be a "no frills" airline with their BoB service and what not, but in the end, I still pay $900USD for a 45min flight from Sao Paulo to Rio. I could fly from Sao Paulo to the USA for lower than that for christ sake.

Although I can only speak for Brazil (however I think this translates to other SA countries), the lack of competition between airlines leads to extremely high fares, especially between the large cities. No LCCs are truly here because they don't need to offer low fares to stay in business.

United1689

[Edited 2013-12-11 12:05:33]
 
smittyone
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 9:11 pm

Quoting odwyerpw (Reply 18):
RyanAir and EasyJet are exceptional (in terms of what they've accomplished, not necessarily their product.).
You cannot compare SouthWest to them.
Why? Because Southwest has merely managed to dominate one country; the United States.
It does not fly it's own metal in Mexico, Canada or nor the other Central American countries.
Central America is physically part of the North American Continent.
Quoting odwyerpw (Reply 18):
Therefore SouthWest has not dominated North America in the same fashion that RyanAir has dominated Europe.
SouthWest has dominated the United States, one country.
The United States spans the continent of North America, but is not all of North America.

Not sure when 'continental dominance' became the gold standard for airline achievement, but by your logic QANTAS' accomplishments must be epic I guess?!

The US market is roughly as large as that of all of Europe combined. Southwest's operation dwarfs Ryanair's by nearly every metric - fleet size, pax carried, distance flown, etc. On the other hand Ryanair does serve more destinations and their planes are newer...that is also true!

Both airlines fly a lot of 737s in a one-class arrangement with theoretically 'no frills'. That is why people compare them.
 
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reffado
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Why doesn't Latin America Have Its Own LCC?

Wed Dec 11, 2013 9:56 pm

Quoting United1689 (Reply 20):
G3 is in no way an LCC. They try to be a "no frills" airline with their BoB service and what not, but in the end, I still pay $900USD for a 45min flight from Sao Paulo to Rio. I could fly from Sao Paulo to the USA for lower than that for chr

Thank you. This is exactly what G3 is. And honestly, they keep losing money even like this. I wonder how much time before they go under and make the market even worse than it already is.
 
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ODwyerPW
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Why doesn't Latin America Have Its Own LCC?

Thu Dec 12, 2013 1:51 am

Quoting Smittyone (Reply 21):

Not sure when 'continental dominance' became the gold standard for airline achievement, but by your logic QANTAS' accomplishments must be epic I guess?!

I wasn't thinking so much in terms of 'continental dominance'. Only that it's amazing how many countries RyanAir flies to.
Obviously USA is so big, SouthWest doesn't need market penetration North or South of it's borders to be hugely succesful.

In that way, RyanAir is a different kind of LLC than SouthWest. For fares to really drop in Latam, someone needs to be able to accomplish what RyanAir has.
But I guess I'm bordering on 'stating the obvious', and not contributing much more to the thread.

Thanks for sharing the LAN info. I completely forgot about LAN in Chile.
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smittyone
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Why doesn't Latin America Have Its Own LCC?

Thu Dec 12, 2013 12:34 pm

Quoting odwyerpw (Reply 23):
But I guess I'm bordering on 'stating the obvious', and not contributing much more to the thread.

No, now that you expanded on it I totally see the point you were making and agree. Sorry I jumped on your statement, I 'm sort of spring loaded toward the end of the day  
 
RCS763AV
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Why doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 10:26 am

Latin America won't have a continental LCC for the forseeable future because of restrictive legislations that limit the amount of foreign investment in many of the countries or the amount of frequencies that may be flown between one and other. If there was a one sky policy in the continent, like there is in the EU, then we could talk about this kind of operation. Meanwhile, we'll have to do with national LCCs on each of the countries (still, the only countries in the region which have truly developed LCCs are Brazil and Mexico, with Colombia just having started to feel the phenomenon in 2009 with Aires until t became LAN in 2011 and then since 2012 with Viva).

Quoting SCL767 (Reply 7):
VivaColombia's "hub" is Medellín-Córdova. VivaColombia operates less than 9 daily flights into BOG...

VivaColombia are shifting the focus of their operation into more trunk routes out of BOG, they're currently reducing MDE-XXX flights in order to increase flights on the MDE-BOG and BOG-CLO routes- New aircraft will be flying out of BOG on routes already approved by Aerocivil, and other routes will be asked for in the next approval meeting.

Quoting SCL767 (Reply 9):
VivaColombia may be flexible; however the significant capacity constraints at BOG are increasing even though BOG has shiny new terminals. BOG does not suit VivaColombia's growth plans, that's why they decided to be based at Medellín. Interesting to note that VivaColombia's fleet growth has been stagnant since entering the Colombian domestic market...

BOG is still making improvements to it's infrastructure. A taxiway redistribution which should be ready by 2015 plus the new technologies that will be available with the new control tower currently being built will considerably increase the airport's operational capacity. There is also a master plan for the continued expansion of the airport terminals up to the year 2030. Not only that, but Viva will be transferred to the Puente Aéreo terminal from March 2014, where they'll have plenty of space along with Easyfly and Satena to expand their operation (it currently hosts the entire AV domestic operation, over 160 daily departures).

Quoting [email protected] (Reply 11):
Certainly not: it has 29-seat Jetstream 41s. These will have high CASM and high seat costs. I also can't imagine that the airline's aircraft are particularly productive. No doubt its operational costs are pretty high.

Easyfly achieves cost savings due to the low leasing costs of the aircraft and a highly efficient rotation schedule, where the planes do 6 or 7 daily rotations from their bases. But they are not a true LCC, they might have some competitive prices but their focus has been serving the corporate market with high-frequency schedules on regional routes. By the way, the airline has a plan of replacing the Jetstreams with ATRs.

Quoting Summa767 (Reply 13):
Just today there is an interview in El Colombiano newspaper with Declan Ryan, representative of Irlandia -one of the investors in Viva- in which he mantains an aim for 50 airplanes in the longer the longer term and hints at imminent news on fleet additions in the fleet.
Mr Ryan is currently in Medellin for a board meeting.

It's funny how skewed the interview is. Showing us a pearl of colombian journalism, Medellín's regional newspaper asks Mr Ryan "Have you seen the new ElDorado aiprort, it's going to be small for it's real needs isn't it, what do you think?", and Mr Ryan politely answers that He hasn't been to BOG yet as he finds the immigration process too slow there like at all big hub airports, so he preferred to fly directly into MDE. It's like the journalist is scared that Viva will be flying less from MDE, which they will. I just started a thread on the matter by the way.
 
luckyone
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Why doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 10:41 am

Quoting odwyerpw (Reply 18):
Therefore SouthWest has not dominated North America in the same fashion that RyanAir has dominated Europe.

Ryanair didn't start to dominate Europe until a common air market was established. This rendered a large chunk of the EU a "domestic" flight zone, roughly equal to the size and market of the United States. Also, I'm sure you're aware that most of the countries in Europe are smaller than a great many of the states in the United States.
 
peterinlisbon
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 11:19 am

Try looking at fares from Panama to Colombia (two neighbouring countries) and you'll see fares of 500$ return, a total rip off. These are flights of about 1h30m, which in Europe could be had for a tenth of the price (50$) if that and in the US or Southeast Asia for less than 100$. There used to be Aires but they were taken over by LAN, and TACA has been taken over by Avianca. So basically in Central America there is a cartel of TACA and Copa charging 3-5 times what would be reasonable anywhere else in the world. How can it cost the same for a 1 hour flight here as a 12 hour flight from London to Hong Kong in countries with much lower wages and standards of living? I think it comes down to corruption as the businessmen bribe the politians and judges to let them keep making a killing by ripping off consumers.
 
Summa767
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 12:04 pm

Quoting RCS763AV (Reply 25):
Not only that, but Viva will be transferred to the Puente Aéreo terminal from March 2014, where they'll have plenty of space along with Easyfly and Satena to expand their operation

Whilst Viva should will undoubtedly grow out of BOG, it is not clear that they will even have a base there.
In the interview, Declan Ryan said very clearly that the best decision they took was to base Viva Colombia at MDE.

Not surprisingly, just a few days ago there was chaos in BOG as tehre si every so often, and whilst Avianca suffered anotehr dose of image tarnishing, Viva only had minimal disruption.

Quoting RCS763AV (Reply 25):
It's like the journalist is scared that Viva will be flying less from MDE, which they will

I am quite clear from Mr Ryan's answers that Viva will actually expand. That frequencies and routes get adjusted in the short term to best use their existing capacity of just 5 A320s should not detract from the next leap that the airline will take. We should see them starting international routes and as such they have requested MDE to Panama, Cancun and Lima, and BOG to Panama.
I am sure that we will hear about additions to the fleet shortly as Mr Ryan has stated.
 
AM744
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 6:08 pm

I can't picture a 'Latin American' LCC because we are a cultural rather than an economic construct. Europe and the US are tightly knitted from an economic standpoint and that generates air traffic.

Maybe we can talk about a Mercosur LCC or a South American LCC, but even the latter may be pushing it as I suspect countries like Peru, Ecuador and Colombia have more ties among themselves and with the US than with it's southern neighbors.

So, rephrasing the original question, I'd agree with other posters and say that Mercosur + Chile does not have an LCC because Brazil and specially Argentina do not have any interest on that happening.
 
RCS763AV
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 6:36 pm

Quoting Summa767 (Reply 28):
In the interview, Declan Ryan said very clearly that the best decision they took was to base Viva Colombia at MDE.

Yes, because when the airline started operations back in 2012, BOG had no space whatsoever to accommodate a base for the airline that was efficient enough. With the infrastructure available today and in the near future, there is a completely different set of things.

Quoting Summa767 (Reply 28):
Whilst Viva should will undoubtedly grow out of BOG, it is not clear that they will even have a base there.

I think it's clear given the amount of domestic routes they intend to start from BOG. It's being said in other forums that BOG-PEI is a go starting Jan 20th, a route that failed miserably from MDE, as did BGA, which is also in the plans to be launched from El Dorado.

Quoting Summa767 (Reply 28):
Not surprisingly, just a few days ago there was chaos in BOG as tehre si every so often, and whilst Avianca suffered anotehr dose of image tarnishing, Viva only had minimal disruption.

There every so often? If you actually followed the news, the chaos that was generated at the Puente Aéreo terminal was due to AV's fault, and nothing more. They have severe understaffing issues with their crews, which led to a snowball effect in the entire operation when a couple of flights were delayed due to weather reasons at airports different than BOG, leading to numerous cancellations because there were no pilots or flight attendants available. That, combined with the insufficient size of the Puente Aéreo terminal to handle Avianca's domestic operations, caused havoc. The other airlines had some delays due to he weather but everything went easily.

And a "chaos" related to weather delays is something that happens "every now and then" at every major airport in the world, by the way. Even so, this was not the airport's fault, but Avianca's.

Quoting Summa767 (Reply 28):
I am quite clear from Mr Ryan's answers that Viva will actually expand. That frequencies and routes get adjusted in the short term to best use their existing capacity of just 5 A320s should not detract from the next leap that the airline will take.

Indeed, that next leap will be growing from BOG, and maybe adding what was cut from MDE, plus international routes.

Quoting Summa767 (Reply 28):
We should see them starting international routes and as such they have requested MDE to Panama, Cancun and Lima, and BOG to Panama.
I am sure that we will hear about additions to the fleet shortly as Mr Ryan has stated.

We'll see. I don't know if an airline that size will be capable of launching 4 international routes in just one year.

Quoting AM744 (Reply 29):
I can't picture a 'Latin American' LCC because we are a cultural rather than an economic construct.

That is partially true, but economic interaction between latin american nations is booming through trade and finance and some foreign investment. Many companies in the region are now "multinaltinas" that serve many markets around the continent. So I wouldn't say there is no economic relations between our nations. Certainly the amount of chilean and brazilian investments in Colombia, the mexican construction and food companies being all over the place and the central american financial sector being owned in its majority by colombian banks suggest otherwise.

[Edited 2013-12-13 11:00:16]
 
Burkhard
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 6:55 pm

LCC require a cost sensitive costumor base - and that is the middle class that pays tickets from their own money, not cpmpanies money, not tax payer refund, not stealing money from the company by using business miles for private flights - and this middle class is too small in LATAM still.

Those whi can afford to fly, most of them do not mind 20% higher fares.
 
RCS763AV
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 7:04 pm

Quoting Burkhard (Reply 31):
and this middle class is too small in LATAM still.

It is not as small as you might think. The latin american middle class has been growing explosively during the last decade, and is already very well established in countries like Chile, Mexico, Argentina, Uruguay and Brazil. Colombia, Perú and Ecuador also have moderately sized middle classes that are growing very fast, more so in Colombia. The market is ripe for LCCs right now.
 
United1689
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 7:15 pm

Quoting RCS763AV (Reply 32):
It is not as small as you might think. The latin american middle class has been growing explosively during the last decade

This is true, it has been growing.

Quoting RCS763AV (Reply 32):
[The middle class]is already very well established in countries like Chile, Mexico, Argentina, Uruguay and Brazil.

This is not so true. Although the middle class is growing fast, it is nowhere near the level of places in Europe or North America.

Quoting RCS763AV (Reply 32):
The market is ripe for LCCs right now.

Not exactly. I'd give it another decade for the middle class to grow, and then the market will be ready.

United1689
 
RCS763AV
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RE: Why Doesn't Latin America Have Its Own LCC?

Fri Dec 13, 2013 11:55 pm

Quoting United1689 (Reply 33):
This is not so true. Although the middle class is growing fast, it is nowhere near the level of places in Europe or North America.

No one is saying that it is in the levels of Europe or North America, mainly because the term "middle class" has different ways of being measured in different contexts. These countries said above have a well established middle class (More in Chile and Uruguay), which is large and growing. It might not be 80% of the population like in Europe or 60% like in the US, but it's well over 35% of it. Even so, the point isn't comparing latin america to Europe or the US, but discussing wether there is a market for LCCs and if there could be a continental LCC.

Quoting United1689 (Reply 33):
Not exactly. I'd give it another decade for the middle class to grow, and then the market will be ready.

Then ask all of the LCCs that have been drawing people away from buses around the continent how they're getting 40% growth rates year over year (Volaris, Interjet, Vivaaerobus, VivaColombia, Azul, GOL at the start). The market is ready for an influx of LCCs, fares have been artificially high for decades and there are new resources available to be exploited by the airlines, people want to travel more and cheaper, and with the sub par road and rail infrastructure present throughout the region, most will pay for a 1 hr plane trip over a 10-12h bus ride on dangerous mountain roads if the price is right. It is what's happening in Mexico and Colombia as we speak.

Just the fact that the middle class is still growing and not at the levels of Europe and the US doesn't mean the market isn't there for low-cost airlines. Look at Southeast Asia.
 
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Gonzalo
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RE: Why Doesn't Latin America Have Its Own LCC?

Sat Dec 14, 2013 12:19 am

Quoting RCS763AV (Reply 34):
It might not be 80% of the population like in Europe or 60% like in the US, but it's well over 35% of it.

Can't speak for Uruguay, but in Chile 84 % of the population think they are part of the middle class. Probably some part of that number doesn't fit in the group, some very wealthy people doesn't feel comfortable being qualified like "rich" and prefers to say the are "upper middle class" ( whatever that means ), and on the other hand some poor people is ashamed about their social/financial condition and says "I'm middle class" when statistically, according to the cold numbers, they are not. The number of people suffering poverty in Chile is about 19 % and decreasing.

http://www.economiaynegocios.cl/noticias/noticias.asp?id=99870

http://economia.elpais.com/economia/.../actualidad/1377876159_240790.html

All this encouraged many travellers who usually spend long hours in buses to take a plane for the first time, and the Chilean Market regarding aviation is already bigger than the Argentinian market ( significant if you think Chile Population is around 17M and Argentina Population around 41M )

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Viscount724
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RE: Why Doesn't Latin America Have Its Own LCC?

Sat Dec 14, 2013 1:13 am

Quoting luckyone (Reply 26):
Also, I'm sure you're aware that most of the countries in Europe are smaller than a great many of the states in the United States.

But generally with much larger populations. Just comparing the 28 EU members with the 50 U.S. states:

USA - total population 314 million
Average state population - 6.3 million

EU - total population 503 million
Average population - almost 18 million
 
Wayfarer515
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RE: Why Doesn't Latin America Have Its Own LCC?

Sat Dec 14, 2013 1:37 am

Sometimes establishing a LCC even inside a small country has nothing to do with the lack of market or people being unable to pay for air transportation.

For example, in HN a flight from MHTG to MHLM will cost you around 300 USD roundtrip in Taca Regional, we are talking here of only a 93NM trip, similarly a roundtrip from MHTG to MHLC will cost you around 400 USD for about 97NM.

Don't even get me started on what the charge you to go to MHRO.

The bus line transportation will cost you around 30 USD to 80 USD but will take you about 4 hours and 8 hours to each destination.

There are some small airlines with flying coffins out there but they have too small airplanes and way too much of a bad reputation to make them a serious competitor.

The fares being charged by the bus lines should be the ones being charged by Taca Regional if we consider the capacity and frequencies we have in the transportation system. But guess what, this is a monopoly and the moment some real LCC model competes with both Taca Regional and the bus lines the government will find a way to screw you up.

The market is there even inside small countries such like HN, its just that the status quo have never and will never let you put some real competition. As Chomsky once said, capitalism works great as long as you don't screw up the ones that own that capital.

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