EconomyFinancialAvianca traces its route to Mexico: more air cargo,...

Avianca traces its route to Mexico: more air cargo, but with skepticism in the AIFA

The aviation sector was left unrecognizable in much of the world after the COVID-19 pandemic, and one of the greatest examples of this is in the Latin American region. Through Chapter 11, the structure of Aeroméxico and LATAM Airlines changed substantially in terms of shareholders and costs. Avianca has not been oblivious to this: after completing its restructuring at the end of last year, it closed some acquisitions and new stakes in other airlines, with one goal: to become one of the new giants in the region.

The tokens of the global air sector have moved aggressively in Latin America since the crisis caused by COVID-19: the American Delta made an effort to maintain a stake in Aeroméxico , targeting the cross-border market with the United States and South America through LATAM Airlines , where Qatar Airways also has a stake.

Given this, Avianca has not stood idly by. In April, the company signed an agreement with its Colombian counterpart Viva for it to form part of the Avianca Group, and in May, the main shareholders of the Colombian company announced the creation of Grupo Abra by shareholders of the Brazilian company GOL , which It would have 100% of the economic rights of Viva ‘s operations in Colombia and Peru, but without controlling it, in addition to having a credit convertible into shares in the Chilean Sky Airline .

What is the role of Mexico in the new era of Avianca? For Frederico Pedreira, executive vice president of operations at Avianca , the path is clear: the opportunity for more commercial operations is great, but the environment remains challenging.

“Chapter 11 allowed us to put our foot back on the gas, and some markets did very well in terms of recovery. Mexico especially. In passengers we are practically at the same pre-pandemic volume, ”explains the manager to Expansión .

Caution for fuel, air safety and AIFA

The Mexican market has had an exceptional recovery from the health contingency, and for Avianca it has been no exception. In the accumulated of the first semester of this year, the airline transported 37% more passengers than in the same period of 2019, while in June the growth was 46% compared to pre-pandemic levels.

The airline currently operates eight direct routes from Mexico: five from the capital, and three from Cancún , which not only have Colombian cities as destinations, but also some such as San Salvador and San José , in Costa Rica. Of these, two routes have been launched this year (from Mexico City to Medellin and Cali ), and a new one is being prepared between Cancun and Quito .

However, the company remains cautious on several items. One of them has to do with jet fuel , the highest operating cost of airlines, which in the last year has risen 72.1% , according to the Fuel Index Monitor of the International Air Transport Association (IATA, for its acronym in English). ).

“We want to do many things in Mexico, be it Cancun, Mexico City, from Central America, Colombia, Ecuador, we want to do it; what I cannot tell you is if we will do it this year or not, for one reason: fuel”, warns the manager.

To mitigate the rise in fuel, the airline sector has chosen to transfer part of the prices to the consumer, which in the case of Avianca has translated into rates between 20% and 25% higher , although in some destinations the increase it’s even bigger, admits Pedreira.

To this has been added a problem that the manager considers growing: that of air safety in Mexico City .

“There are major operational problems. I would tell you more: Topics that touch flight safety . We made several communications to our pilots about the approaches to Mexico City, with so many changes, and it is something natural in aviation; There is a lot of talk about safety and change management , one has to be more attentive”, says Pedreira. “There have been more upcoming aircraft events than normal (…) It has at least doubled.”

This has not prevented the company from evaluating an operation at the new Felipe Ángeles International Airport (AIFA) , where a visit is planned today to assess its suitability. For this, the airline considers that there should be several incentives.

“It is an equation of the cost of the airport, from the airport area to what we pay for check in counter , parking fees, landing fees; We look at how much it is going to cost us versus whether or not there will be cannibalization of Benito Juárez passengers, which is another very important variable. In addition, today we have a very focused team; we would have to create another team, there are issues of economy of scale that is inefficient. Those incentives, at the very least, have to pay for the inefficiency of having a totally separate team,” he says.

Air cargo, the clearest opportunity

While the commercial flight strategy seems more uncertain, in the air cargo segment the story seems to be different.

Before the pandemic, AeroUnion – the air cargo arm of Avianca in Mexico – was the second largest international cargo carrier in the country, only behind Aeroméxico. For 2020 it closed as the largest freighter in the international segment, while in 2021 it was the second largest only behind Mas Air, but surpassing Aeroméxico.

The manager affirms that in this segment, Avianca registers a growth of up to 17% compared to last year, for which the plan is to add four new A330 aircraft to the AeroUnion fleet, and unify it under the same brand.

“What we want is to improve how Aerounion can connect to the Tampa Cargo network , which is our other cargo company. We are in the process in Mexico with the authorities and with the local operation because we want to bring new planes and reinforce not only the network from Mexico, but also how to improve connectivity to Central, South America, Europe and the United States.”

However, uncertainty also prevails in this segment: that of the federal government’s agreement with the airline sector to transfer charter and national cargo operations from AICM to AIFA , where the company is still unclear as to what will happen.

“It’s one of our talks tomorrow,” the manager said yesterday. “One of the reasons for coming here is that Benito Juárez [the airport] is going to continue to be Benito Juárez, but apart from being very active, there is an infrastructure problem, not only air traffic control , but also land, terminals ”.

Hence, for the winter season, the airline plans to keep the same takeoff and landing times – or slots – that it currently has. “We had plans to add operations in the second half, unless there is something big that happens at the macro level, but we are probably going to keep the operation we have,” concludes Pedreira.

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