Latin American air travel soars
Fabio Villegas, CEO of Colombian airline Aviancataca, deals with growing pains.
In no part of the world are travelers flying with greater gusto than in Latin America. The region led the globe in growth in air travel last year, with 10.2% more passengers than in 2010, more than double the 4% jump in North America, according to the International Air Transport Assn.
Stoking the expansion is a boom in Latin American exports, including oil, coffee, copper and soybeans. That has boosted incomes and helped expand the middle class. As a result, the desire to travel has taken wing among a much larger group of consumers.
Another updraft is increasing trade between South American and Caribbean countries, said Fabio Villegas, chief executive of Bogota-based Aviancataca. One of the region’s largest air carriers, it has seen its fortunes rise after a 2004 bankruptcy.
Throughout the region, airports are struggling to keep pace with busier skies. The Colombian government only recently settled a 47day work slowdown by air traffic controllers demanding higher pay, shorter hours and more staff support to cope with the increased workload.
Villegas spoke with The Times the day after the labor dispute was settled: Was the controllers’ strike a symptom of airlines’ growing pains?
The industry has expanded in dramatic form, and we have been calling attention to the need for more infrastructure for a long time. Bogota’s new El Dorado air terminal under construction will help. But we need to go further. The new terminal [to open in 2014] was designed for 16 million passengers, and last year we already moved past that to nearly 20 million.
Air travel in Colombia and other South American countries has grown faster than anyone thought, including the Bogota terminal designers. What growth rates were they factoring in?
They were assuming normal passenger growth would be 5% to 6% a year. But in 2010 [the number of] passengers grew 30% over the previous year, and last year [it] increased 10%. There have been reports of a global pilot shortage. Has it affected Colombia?
We have sufficient pilots. Having said that, demand has made it much harder and expensive to recruit pilots. Especially here, where there is a lot of competition among all the airlines that fly here. There is a shortage of maintenance crews, but that mainly affects India and China. Put on your economist’s hat and explain the factors driving air travel growth.
Colombia’s economy has taken a quantitative leap in investment, investor confidence and in radically improved security conditions. Oil and coal projects have brought a new source of investment in the billions of dollars. All that new business translates into a lot more passengers. Also, Latin America is much more interconnected than before. To give you an example, we had four weekly flights to Brazil in 2004, and now we have 21. Eight years ago, Avianca was in bankruptcy, and now, after merging with Taca of El Salvador in 2010, it’s one of the largest airlines in South America. What was the secret?
First, the renovation of the fleet enabled us to modernize our service and lower costs. We’ve gone from 40 to 120 airplanes, including a purchase of 60 new planes from Airbus in 2008. We’ve just signed a deal to buy 50 more, including the latest “NEO” Airbus models, and 12 Boeing 787 Dreamliners. New airplanes are critical because the latest generation uses 20% to 25% less fuel, which in this age of high fuel prices is an essential competitive factor. Fuel prices and the global financial crisis recently tipped American Airlines into bankruptcy, adding to U.S. airlines’ shaky image. The new crop of Latin American airlines seems more stable. True?
Latin American airlines generally have had to modernize because the industry previously went through its own collapse.
Acouple of decades ago, most airlines were statecontrolled. They all went broke, but that opened a space for new companies with a modern orientation toward efficiency and competitiveness, not on the flags they fly or national interests.
If you look at all the airlines that confronted these recent moments of crisis to see which ones emerged with positive results, we are among the very few. And a good number of them are based in Latin America. Kraul is a special correspondent. business@latimes.com