Opportunity Knocks For New Latin American Services

The new agreement between the US and Colombia will allow greater freedom for carriers to select routes between the two countries. It is expected that there will be further growth from low-cost carriers not only from the Florida region, which is within a three and a half hours range with narrowbodied aircraft, but also from the other markets in the US such as Washington and New York which are a five to six hour sector length but can still be reached by narrowbodied aircraft such as the A320 and B737.

Currently there are eight airlines operating routes between the two countries which is largely dominated by flag carriers, with Colombian national carrier Avianca the largest operator. The table below summarises which airlines are currently operating.

Source Flightbase 14-20 Nov 2010

There are currently over 200 weekly flights between Colombia and the US market. During the same week in 2008, there were only 150 weekly flights. There has been a significant ramp up in capacity by regional carrier Aires which has recently been taken over by LAN Airlines. Growth has also come from the low-cost sector with Spirit operating more than double its 2008 schedule and JetBlue also entering the market, operating a five-times weekly service from Orlando to the Colombian capital of Bogota.

With strong two-way traffic, there is a natural scope for growth, with a large Colombian disapora in the US providing the VFR and leisure mix. There is also a free trade agreement in place between the two countries hoping to eventually create a comprehensive agreement to eliminate tariffs and barriers to promote increased trade.

TRAFFIC FIGURES

IATA BSP data (Airport IS) shows that between July 2009 and July 2010, over 2 million O+D passengers travelled between the US and Colombia (Two-Way), with Avianca having a 39% share of this traffic. In the same time period between July 2007 and July 2008, nearly 1.7 million O+D passengers flew between the two countries with Avianca’s market share being diluted as it had a 47% share during this period. Spirit has been the main beneficiary with their share increasing to 11% compared to a 1% share in 2008.

This low-cost growth has helped to stimulate the market, but there is clear evidence that there is room for more non-stop route development between the two countries. Of the 2 million O+D passengers that travelled between the US and Colombia, only 1,098,368 travelled on non-stop services, leaving nearly a million passengers flying on a connecting service.

Miami to Bogota remains the key route between the two countries, with American Airlines carrying nearly 150,000 O+D passengers between the city pairs, and Avianca carrying 132,000 passengers on the same routing. In fact, Florida remains the key market for Colombia as over 894,000 O+D passengers travelled between Florida and Colombia between July 2009 and 2010, almost 50% of the entire US to Colombia market.

With increased bi-lateral access, and key interest from JetBlue and Spirit in developing their Latin American presence it seems certain that there is exciting opportunities for airlines to develop this market.