Bisignani Calls for Consolidation Latin American Airlines Should Be Free to Combine Forces Like in Europe, Says IATA’S Director General
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DAY 2 | FRIDAY | 9 NOVEMBER 2007 BRINGING YOU THE NEWS FROM THE ALTA LatIN AMERICAN AND CaRIbbEAN AIRLINEDAILY LEADERS FORUM at CaNCUN Bisignani calls for consolidation Latin American airlines should be free to combine forces like in Europe, says IATA’s director general BY KERRY EZARD Swiss and Lufthansa, and Brussels overnments in Latin America Airlines and Virgin Express, Gmust loosen their grip on the “could be a model” to follow, ac- airline industry and open up op- cording to Bisignani. portunities for consolidation, po- He pointed out that the “build- tentially creating a big internation- ing blocks for liberalisation” al- al carrier like Air France-KLM, ready exist in Latin America, with according to IATA director general carriers such as LAN having de- Giovanni Bisignani. veloped “cross-border clone op- Addressing ALTA delegates erations” as a way of getting yesterday, the IATA chief said it around bilateral rules. “Now gov- “makes absolutely no sense” that ernments must catch up with Latin America represents 5% of commercial reality by defining a global traffic but is divided into 39 staged approach to full liberalisa- markets. “Bilateral agreements tion with transparent and chal- Airbus dancing to a new tune cannot keep pace with market de- lenging targets.” velopments and they prevent the Bisignani also lambasted coun- Speaking at an Airbus-sponsored ALTA cocktail reception on Wednesday consolidation needed to build tries in Latin America for running evening, Barry Eccleston (president and chief financial officer of Airbus strong global competitors,” said airports and air traffic manage- North America) said that the European company was restructuring its Bisignani. ment as monopolies and using presence in both the USA and Latin America. From 1 January 2008, a He added that as a region, Latin them as “a licence to print new customer-focused team, headed by VP customer affairs Rafael America should “throw into the money”. He added: “The biggest Alonso (pictured left with ALTA’s Alex de Gunten, centre), will be based in game a big international player”. problem is the airport concession Miami to service the markets in Latin America and the Caribbean. Alonso The European approach, which fee structure that guarantees prof- and his team will move from Toulouse from where they previously also has made consolidation possible its with no incentive to invest in looked after sales in Spain. in the cases of Air France-KLM, efficiency or better facilities.”■ Mexican carriers preparing for bloody battle exico’s new low-cost carriers Andrés Conesa points to “signifi- Volaris chief executive Enrique Mare gearing up for a poten- cant overcapacity” in the market, Beltranena, while acknowledging tially bloody battle for survival in which he blames for declining that “the battle will be longer than a market which some say is over- yields. “There is definitely space we expected” and “the lowest cost saturated and headed for signifi- for a low-cost carrier in Mexico, will win”, is optimistic in the po- cant consolidation. but not for seven,” he says, adding tential for future growth in the But there are differing views on that nowhere else in the world has Mexican market: “Mexico is a the extent of overcapacity in Mex- the number of airlines in one market of challenges and opportu- ico, particularly in the low-cost country doubled in the space of nities, but we see more opportuni- and network carrier camps. Over one year. “Mergers are one way to ties than challenges. We are sure in the network carriers’ corner, consolidate the industry faster.” we can continue strengthening Aeromexico chief executive Enrique Beltranena However, in the low-cost corner, aviation supply in Mexico.” ■ INSIDE THIS ISSUE IATA demands safety first Page 3 US carriers on the increase Page 4 BRA undone Page 8 Bisignani: Latin airlines suffer from Heilbron gazes into his Slash credit card costs Page 10 political myopia Page 3 crystal ball Page 6 Aladia grows leisure Page 10 alto-nov-07-07-p002 01/11/2007 6:50 PM Page 1 NEWS NEWS IATA demands safety first BRIEFS Latin America’s safety record languishes behind the rest of the industry IntERJET VEntuRES OutsiDE MEXICO ATA director general Giovanni Chile was the first Latin Ameri- oversight programme. One of Mexico’s new breed of IBisignani yesterday said Latin can country to follow the recom- Bisignani called this move low-cost carriers begins its first America needs to improve its air- mendation and Costa Rica recent- “music to my ears” and said politi- international service this month. line safety record because while ly announced that it would do the cal leadership and commitment to Interjet starts a daily service on the region only accounts for 5% of same. safety is “critical to improving the 12 November between its Toluca global traffic, it represents 14% of Mexican minister of communi- region’s safety record”. He urged base near Mexico City and accidents. cations and transport, Luis Tellez, the other 36 governments in the Guatemala’s La Aurora airport During his presentation, he used the Forum to announce that region to “follow up these wise near Guatemala City, and be- pointed out that 2006 was the glo- Mexico will use IOSA in its safety decisions with urgent action”. ■ tween Cancun and Guatemala bal airline industry’s safest year on City. The airline also begins a record with one accident for every Mexican transport minister double-daily service this week (7 1.5 million flights. However, he Luis Tellez receives an award November) between Toluca and added that in Latin America this from ALTA and IATA, Merida, in Yucatán. The privately statistic changed to one accident recognising the country’s owned airline, which flies only for every 550,000 flights. decision to include IOSA in Airbus A20s, began service in Safety remains IATA’s “number its civil aviation December 2005. one priority”, and Bisignani is urg- standards ing governments throughout Latin VARIG ADDS FliGHts America to incorporate IATA’s Op- Varig plans to add service be- erational Safety Audit (IOSA) into tween Argentina’s capital of their national legislation. The Buenos Aires and both of Brazil’s IATA chief and ALTA president major cities, São Paulo and Rio Pedro Heilbron praised Eustacio de Janeiro, starting 1 Fabrega, president of the Latin November. VRG, the former American Civil Aviation Commis- Varig, will initially offer 28 fre- sion (CLAC), for recommending quencies a week among the the incorporation of IOSA into na- three cities. tional laws. Latin airlines suffer from ‘political myopia’ espite the expectation that Bisignani said that the figures “re- from political myo- ated by air transport, including DLatin American carriers will quire us to ask some tough ques- pia” and this short- the tourism impact, amounted to post profits next year, IATA chief tions about the structure of the in- sightedness is de- £502 million – 2.1% of revenues. executive and director general dustry in this region. Governments spite the fact that ■ Mexico: Demand-side benefits Giovanni Bisignani (pictured) says treat us like ‘cash cows’ despite the they pay $2.5 bil- to GDP amount to 3% of Mexico’s that the figures in themselves – fact that we provide more than two lion for infrastructure and receive GDP. projected to be around $200 mil- million jobs and support $122 bil- little transparency in return. ■ Panama: Export earnings gen- lion – are no reason to celebrate. lion in business.” To address these issues, CLAC erated by air transport, including Speaking yesterday at ALTA, Airlines in the region “suffer and ALTA commissioned research tourism spending is $1.14 billion to study the economic and social – 9.5% of earnings. ■ benefits and impact of airlines in the region, using Bolivia, Chile, DAILY Colombia, Mexico and Panama as Win AN IPOD NANO! PublisHED BY AiRlinE BusinEss WitH AEROCOMM the subjects. Stop by the Airline Business Data from 1996 to 2006 was col- booth outside the conference DAILY editorial Photographer Visit us on the web lected and this was analysed, also room, drop your business card team Tom Gordon flightglobal.com/ab using Oxford Economics’ World into the bowl and you’ll be in with Kerry Ezard Advertisement ©Airline Business economic model to estimate the the chance of win- Mark Pilling sales 2007 direct, indirect and induced bene- ning an Apple iPod Geoff Thomas Robert Hancock fits to each of the economies. Nano. The draw Shawn Buck If you have a story The results provide the airlines will be held on Design & production Printed by come and see us in with much ammunition for the Friday afternoon – Andrea Crisp Pixel Press, Cancun Coral Sea 2. future, including: so don’t delay, ■ Colombia: Tax revenues gener- drop today! November 2007 | Airline Business Daily @ ALTA | StRatEGY US carriers on $120 bn Latin market the increase prediction, Boeing A growing number of US carriers will enter the USA-Latin America market ir travel within Latin America In the next 20 years, deliveries as they seek opportunities outside Awill grow 6.6% during this in Latin America will comprise: their mature domestic market, and as period – well above the world av- ■ 8% regional jets – less than 90 restrictions in bilateral agreements erage growth of 5% and second seats; ease, according to Merrill Lynch ana- only to China’s 8.8%. ■ 80% single-aisle – 90 seats and lyst, Mike Linenberg (pictured). Boeing’s ‘current market out- above; “Latin America represents a fast- look’ analysis is compiled annual- ■ 12% twin-aisle – 200-400 seats, er source of growth [for US carriers] ly and it presents global and re- tri-class; so more have been coming in,” said gional insights into aviation ■ and less than 1% or fewer 747- Linenberg, adding it will be “interest- growth over the next 20 years.