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- 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 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 global traffic, it represents 14% of Mexican minister of communi- region’s safety record”. He urged base near 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 A320s, 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 13 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. size or larger – more than 400 ing to see what happens” as restric- John Wojick is Boeing’s VP sales seats, tri-class. tions in bilateral agreements for Latin America and the Carib- Combined with the retained between the USA and countries in bean and he says: “We forecast air fleet and used airframe acquisi- Latin America are eased. travel within the region to contin- tions, these deliveries will result Linenberg pointed to the recent ue to grow faster than most of the in a regional commercial fleet of expansion of the bilateral agreement rest of the world.” more than 2,420 aircraft by 2026. between the USA and Colombia, Deliveries to airlines in Latin The analysis also predicts sin- which has led to US carriers such as America will represent approxi- gle- and twin-aisle aircraft of be- JetBlue and US Airways applying for mately 4% of the deliveries meas- tween 100 and 350 seats will ac- the rights to serve Bogota. ured by dollar value worldwide count for most regional growth in between 2006 and 2025. air travel over the next 20 years. ■

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 | Airline Business Daily @ ALTA | November 2007 alto-nov-07-07-p002 01/11/2007 6:51 PM Page 1

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ALTA Airline Leaders Forum 2007, More mobility for the world Cancun: Lufthansa Technik wishes a pleasant and successful conference. News

Briefs Heilbron crystal ball gazes $400m upgrade for ALTA’s president and airline figurehead compiles a wish list for the region Buenos Aires Aeropuertos Argentina 2000 edro Heilbron, ALTA presi- ■ Intra Latin American-Carib- achieve their fourth consecutive (AA2000) plans to invest $250 Pdent and Copa Airlines chief bean Open Skies.” year of GDP growth. million to build a new terminal executive, used his remarks at the Such measures would give a This climate has helped create a and another $150 million to up- opening of yesterday’s Forum to major boost to a region that has vibrant airline industry that is grade infrastructure at Buenos stress the industry’s positive de- seen its robust economies expand forecast to grow at 6.6% for the Aires Ezeiza International Airport. velopments over the past 12 by more than 6% in 2006 and coming years, he said. ■ The announcement made by months. “Great things are happen- AA2000, which operates a net- ing with the region today,” he told work of more than 30 airports, the audience. comes only weeks before a cru- However, the message, which cial negotiation with the govern- may be his last as ALTA’s figure- ment over an extension of its head if he steps down after this concession period until 2028. Forum, contained a wish list that The airport renewal would give would greatly enhance this devel- Argentina’s principal internation- opment. According to Heilbron: al gateway a new 140,000m2 “Imagine the future if we had: passenger terminal sized for 13 ■ An industry recognised and million passengers per year. promoted for its economic value But the five-year project is not and not just over-taxed; the only incentive Aeropuertos ■ governments that promote reg- 2000 is offering to the govern- ulatory integration and facilita- ment to improve the terms of its tion; concession; local press reports ■ airport authorities working are suggesting that the with us as partners; Argentinean state might recover ■ CAAs working as industry up to a 20% shareholding and a partners; and Pedro Heilbron tries to imagine a better future for Latin carriers seat in the board of Aeropuertos 2000 by capitalising debts. This step towards institutional and judicial peace is considered Arab carriers make Latin inroads essential as AA2000 is planning to stage an initial public offering, By Brendan Sobie Latin American routes, starting to South America following its ac- offering a 30% stake in the com- everal Arab carriers are pre- with Dubai-Buenos Aires. cession next year into the Star pany to investors. Sparing to launch services to Qatar Airways chief executive ­Alliance. South America, the last continent Akbar Al-Baker says the carrier He says EgyptAir will initially TAM announces to be covered in their fast-growing plans to launch its first service to serve South America through a growth of Rio hub networks. South America next year. He says codeshare with Star partner TAP, Brazil’s largest carrier TAM has Emirates became the first Arab it has set aside the capacity to which flies to six destinations in announced the launch of a carrier to serve Latin America in begin one South American route Brazil, but wants eventually to number of domestic routes from October, when it launched six from its Doha hub but has not yet ­operate its own services to the Rio de Janeiro’s Galeão weekly flights on the Dubai-São selected which airport to serve. ­region. International airport, which repre- Paulo route. The carrier says it EgyptAir chief executive Atef “We are thinking about South sents a significant change to its sees Latin America as “a new fron- Abdel Hamid says the carrier is America. We believe there is great São Paulo-centric network. tier” and is eyeing several more also looking at launching services potential there,” Atef says. ■ On 5 November, TAM launched daily routes from Rio de Janeiro to Campinas and Porto Velho, via Embraer stands by deliveries despite BRA crisis Brasilia. On 12 November it will start operations to Manaus, while mbraer delivery forecasts will ­purchase rights for up to 55 more. ­expects to deliver between 165 increasing flights to Curitiba, Enot be affected by the financial Embraer issued a communiqué and 170 total aircraft in 2007 and Belem and Vitoria. crisis that has temporarily shut on Wednesday, assuring “any de- between 195 and 205 aircraft in This year TAM launched inter- down Brazilian E-Jet customer velopments which may arise will 2008. national flights from Rio to BRA (see story on page 8). not have a negative affect on deliv- The company also lists receiv- Caracas and Paris, effectively BRA earlier this year signed a ery forecasts previously disclosed ing 52 total orders and 65 total op- upgrading the airport to the air- firm order for 20 Embraer 195s, by the company”. tions for E-195s, with an undeliv- line’s secondary hub. leased another two of the same Embraer does not break out ered backlog of 42 aircraft type and secured options and ­delivery forecasts by type, but remaining. ■

 | Airline Business Daily @ ALTA | November 2007 Agenda

A LTA Airline Leaders Forum Fiesta Americana Grand Coral Beach | November 7-9 2007 | Cancun, Mexico Dress for the conference is business casual Friday, November 9 9:00 – 10:00 New Distribution Models Moderator: Mexicana Chief Information Officer Santiago Ontañon ■ Amadeus Director of Airline Sales Europe, Middle East, Africa and Latin America Arnaud Debuchy ■ SITA Vice-President Latin America Olivier Layly ■ Sabre Senior Vice-President Latin America Kamal Qatato ■ UATP Chief Executive Ralph Kaiser 10:00 – 10:20 Quantifying the Economic impact of Air Transport in the Region IATA Vice-President Latin America and Caribbean Patricio Sepulveda Pete Garcia 10:20 – 11:00 Coffee Break Sponsored by Snecma Services 11.00 – 12.30 Regional Safety Issues Moderator: ALTA Executive Director Alex de Gunten ■ Marsh Ltd Senior Vice-President Safety and Security Aviation Practice George Snyder ■ FAA Assistant Administrator for International Aviation James Filippatos ■ Airline panel ■ IATA Senior Vice-President Safety, Operations and Infrastructure Guenther Matschnigg ■ LAN Chief Executive Enrique Cueto 12:30 – 2:00 Lunch Keynote Speaker – Mexicana de Aviacion Chairman of the Board Gaston Azcarraga Sponsored by Boeing Roberto Kriete 2:10 – 2:55 US Perspective Panel Moderator: Air Canada Former President and Chief Executive Pierre Jeanniot ■ Continental Airlines Vice-President Latin America Pete Garcia ■ United Airlines Vice-President Latin America Josué Meza ■ Frontier Airlines Director Planning Matthias Barbieri ALTA would like to thank the 3:00 – 3:25 Life after Chapter 11 ­following Senior Sponsors ■ Avianca Chief Executive Fabio Villegas 3:25 – 3:45 Coffee Break Sponsored by World Fuel Services 3:45 – 4:45 Working with Government ■ Grupo TACA Chairman Roberto Kriete ■ Mexico Civil Aviation Director Capt Gilberto López Meyer ■ Aerolíneas Argentinas Chief Executive Esteban Maccari 4:45 – 5:00 Closing Remarks ALTA Executive Director Alex de Gunten ALTA Announcement 6:00 – 7:00 Cocktail Reception [Sunrise Beach] Sponsored by AIG 7:00 – 9:00 ALTA Beach Fiesta [Sunrise Beach] Dress Code: casual (no shoes required) Beach Fiesta sponsored by Volaris Entertainment sponsored by Lufthansa Technik Remarks The ALTA Airline Leaders Forum Agenda is subject to change. Designated areas marked with brackets [ ]. The general dress code for the Conference is Business Casual.

November 2007 | Airline Business Daily @ ALTA |  24-hour news and data from Flight

BRA seeks funds VivaAeroBus delays after suspension transborder service Planned services between Texan capital Austin and Mexico BRA claims suspension of services is temporary, but local have been postponed until March next year media reports suggest otherwise exican startup VivaAeroBus June and July, he says. razilian carrier BRA Trans- 767 and 737 aircraft, leased from Mhas pushed back the start- The carrier has been granted Bportes Aereos is suspending various sources. But crucially it date for its first transborder service. tentative US Department of Trans- all services with immediate effect also firmed an order for 20 Em- The Boeing 737-300 operator portation approval to provide as it seeks funding to continue op- braer 195 regional aircraft three will offer flights between Austin scheduled service to Austin from erating. months ago. and Cancun, as well as , Puebla, Leon, Quere- The São Paulo-based airline Local media reports suggest on March 1 instead of this month, taro, Cancun and Monterrey. claims that the suspension of both BRA is laying off its workforce of chief executive Mike Szucs tells No carrier currently links Aus- domestic and international opera- 1,100. ATI in an e-mail. tin with Cancun, Guadalajara, tions, from 7 November, is just a BRA has had to cope with a The budget airline will add Monterrey, Puebla, Queretaro or temporary measure. number of recent problems in- more Mexican destinations in Leon, according to Innovata. ■ BRA says its shareholders are in cluding the resignation of its chief negotiations to “obtain the finan- executive and requests by Brazil- cial resources needed to continue ian authorities to restrict its inter- operations”. national services in order to im- Gol profits fall sharply The carrier has a fleet of Boeing prove reliability. ■ et profits at the parent of Bra- TAM accident. Consequently load Nzilian carriers Gol and Varig factors plummeted 17.6 points to fell 76% to R$45.5 million ($26.1 61.2%. Yields also came under million) in the third quarter, pressure, falling by 11.7%. prompting the firm to cut its full- While operating costs per avail- year earnings-per-share outlook. able seat-kilometre fell in the third Gol Linhas Aereas Inteligentes, quarter, the enlarged group’s total which is parent of the operators of operating expenses rose nearly budget brand Gol and newly ac- 50% to reach R$1.3 billion due to quired Varig, boosted revenues higher costs. just over a fifth to R$1.3 billion. Operating profits fell sharply The revenue growth was, in a from R$233.1 million to R$30.8 large part, driven by the integra- million in the third quarter, while tion of Varig operator VRG earlier pre-tax profits were 75% down at this summer. Passenger numbers R$62.3 million.

Embraer rose 15.7% at 5.5 million and an- Gol president and chief execu- BRA president Humberto Folegatti (left) shakes hands with Brazil’s cillary revenues were up 57.7%. tive Constantino de Oliveira Jun- president Luiz Inácio Lula da Silva in better times for the carrier But while the combined group ior says the main focus during this increased capacity 76% over the period was the relaunch of Varig’s same period last year, demand international operations and he is rose only a third partly due to dis- also heartened by improvements Paraguay subsidiary ruption in the Brazilian air trans- to Brazil’s air transport system. port system following July’s fatal “The implementation of meas- ures outlined by the airlines and for Brazil’s Ocean Air government represent the indus- razil’s Ocean Air is taking plans, but a local source within try’s commitment to investing in Bsteps to set up an airline oper- civil aviation authority DINAC ad- the infrastructure for the growth of ations centre in Paraguay. mits that, after a visit by Ocean the air passenger transportation The move follows the expan- Air’s main shareholder German market in Brazil,” he says. ■ sion of its main domestic com- Efromovich to the country, the cer- petitor TAM which established tification process is “in the Find these itself several years ago in the works”. breaking neighbouring country under the One of the first routes ear- stories and Transportes Aereos Mercosur marked for Ocean Air Paraguay more every- (TAM) banner. could be a connection to Bogota, day at Air No details are known about the main hub of Avianca, which is Transport Intelligence website rati.com Ocean Air’s local fleet and route also owned by Efromovich. ■ Constantino de Oliveira Junior

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Time to slash credit card costs The logic behind UATP’s corporate credit card is simple, says Ralph Kaiser: “It just saves money – that’s the bottom line”

irline-owned and not-for- Latin America. Aprofit UATP is here at ALTA “That’s why we see the region to attract Latin carriers to become as such a good opportunity,” says issuers of its credit card, used by Kaiser, who expects to sign-up a corporate travellers to buy air tick- Latin carrier in the next year. ets. Airlines doing this “avoid al- Many Latin carriers already ac- together” the 2.5-3% fee that credit cept UATP cards as payment, says card firms place on each transac- Robson Rodrigues, who is leading tion, says David Holmes, director UATP’s push into the region. This sales Americas for UATP. year, Mexico’s Volaris, ALMA and Airlines issuing UATP cards re- Click Mexicana, as well as Brazil’s ceive commission on sales made Gol and Ocean Air, have become to buy tickets but pay no fees to UATP merchants, he says. UATP. Several carriers in Europe The total business conducted on and the USA are UATP ‘issuers’ UATP cards will top $10 billion for but no carrier has signed up yet in the first time this year.■ IER targets Latin America Check-in systems manufacturer IER will be using this year’s Latin American Airline Leaders Forum to drum up business for its common use self-service (CUSS) kiosks throughout the continent, which it sees as an emerging market for this product. IER vice-president and general manager, Herve Muller, says that while the company has not yet signed any contracts for CUSS in Latin America, it sees great potential and aims to seal several deals in 2008. “[CUSS] is mature in Europe, but South America is where Europe and North America were two years ago,” says Muller. IER is courting large cap- ital airports in the region, such as Bogota and Caracas. Bogota has is- sued a request for proposals for self-service kiosks, according to IER sales and service director, Jerome Lavault. The trend for self-service kiosks is slowly beginning to take hold in South America, with Cancun and Santiago airports having already in- From left to right, UATP’s Robson Rodrigues, Ralph Kaiser and David stalled kiosks supplied by SITA. Holmes brandish their UATP cards Aladia’s leisure focus ith four Boeing 757s sched- Mexico’s fast-paced market. “We W uled to be in service by the see ourselves as more of a tourist end of March, Mexico’s Aladia is industry than as an airline.” growing quickly just a year after Privately owned Aladia focuses inaugurating service to Cancun on offering charter packages on from Monterrey. Mexican domestic routes to Can- The airline part of the company cun from the country’s metropoli- was established to provide lower- tan areas and to US destinations cost lift to the tour operating side of like Orlando, Las Vegas and Vail, the business, explains Alberto Mo- Colorado, says Aladia Airlines rales, the chairman of Grupo Alad- chief executive Andres Engels. ia. He describes his business as an These packages are sold by Aladia “integrated travel enterprise” that Travel. “We are budgeting to ramp operates in a different niche from up to one million passengers by the country’s low-cost players in year four,” says Morales. ■ Aladia’s Andres Engels (left), and Alberto Morales here at the Forum

10 | Airline Business Daily @ ALTA | November 2007 2-4 March 2008, San Diego, California

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