S A T U R DAY 3 I SATURDAY I 22 NOVEMBER D A Y

BRINGING YOU THE NEWS FROM THE ALTA AIRLINE LEADERS’ FORUM 2008 IN CANCUN, NOVEMBER

Caribbean Hazy seeking to CEOs buy back ILFC

speak out ILFC founder and chairman Yesterday’s Steven Udvar-Hazy (pictured) panel featured, from took time out from a hectic left to right front, LIAT’s schedule of global road shows Mark Darby, Bruce to address ALTA yesterday. Nobles of Air Jamaica, His goal is to put together Gilles Filiatreault of a “sophisticated investment Cayman Airways and group” to buy out the huge air - Philip Saunders of craft lessor from current owner Caribbean Airlines, American Investment Group, and was moderated which was rescued by the US by Olivier Houri, government in September. president of Global “We are doing road shows Transportation at meeting with large sovereign Unisys. wealth funds, institutional I For full story see p8 investors and others from Europe, the Middle East and Asia,” says Hazy, who founded ILFC 35 years ago and sold it to AIG in 1990 for $1.3 billion. ALTA TO CARTAGENA ILFC management will also take part in the financing group he is seeking to – KRIETE TO TOP JOB establish. While the credit crash has made raising funds difficult, BY MIKE MILLER/BRENDAN SOBIE the near future to discuss various Hazy says the appetite for the LTA airline members had a efficiency improvements. deal is good. “There are a Aproductive final day of the “There are a lot of things we lot of solid, sophisticated 2008 Airline Leaders Forum, want and are willing to do,” Lan - investors that we are talking securing a breakthrough commit - dois told the Airline Business to, but I can’t predict the ment from the region’s transporta - Daily after making the closing outcome,” he says. tion secretaries, appointing a new speech for this year’s forum. “I “We are looking to close president and selecting a new think everyone needs to work to - on the deal by March 2009,” venue for the 2009 forum. gether. Obviously there’s lots of he says. I Grupo TACA chief executive room for improvement.” Roberto Kriete was selected by his Landois says improving the peers to assume the presidency of management of Latin America’s Humberto Treviño Landois ALTA from Copa chief executive airspace and airports was dis - Pedro Heilbron. ALTA members CEOs had a power breakfast with cussed on a general level yesterday also voted to move the forum to 20 senior government officials rep - morning and “we now need to South America for the first time, resenting 15 countries. ALTA exec - come up with more specific plans selecting the Colombian city of utive director Alex de Gunten and on how it will work”. Cartagena for 2009. Cancun has deputy secretary of trans - While no specific improvements hosted the forum the last three portation Humberto Treviño Lan - were committed to, the meeting left years and the first two years it was dois said the meeting was Latin America’s airlines confident held at ALTA’s hometown of extremely productive and although Miami. nothing specific was agreed to, the In the morning ALTA airline two sides pledged to meet again in Story continued on Page 8

INSIDE THIS ISSUE Distribution LatAm carriers lie low Page 3 Check in revolution Page 9 sponsored by: ready for US Page 4 Garza: We’re not low-cost Page 10 More cash for Pluna Page 8 Heilbron wins award Page 11 NEWS

Avianca chief LatAm CEOs say Fabio Villegas its time to lie low Airlines in the region expect no growth and sensible cost-cutting to highlight next year’s plan

BY MARK PILLING his carrier is taking sensible he Latin carrier bosses on ALTA’s cost-cutting measures like post - Texecutive committee gave out a poning the construction of a unified message yesterday to cope new headquarters building and with the industry crisis: keep your putting in a hiring freeze. Cueto heads down. is one of several CEOs who be - Pedro Heilbron, Copa’s head, lieve further consolidation his country the number of play - which have always been the set the tone: “Right now it is the among Latin carriers is in - ers has dwindled from 14 to 8. pillars of our business.” time to lay low and let the bul - evitable. “Consolidation is unavoidable “It’s very clear the region is in lets fly by.” Although it is virtu - Mexicana chief executive in the next few eyars, but it will very good hands,” summed up ally impossible to tell how tough Manuel Borja Chico says that in take due time.” In Mexico he session moderator, Michael Bell next year is going to be, carriers sees one network carrier and of Spencer Stuart. I are cutting back on their growth two low-cost players surviving, and preparing for a rough 2009, “Right now it is the as well as some regional airlines. say the airline chiefs. time to lay low and let Overall, Heilbron believes the “Airlines will be responsible the bullets fly by” region’s carriers are “highly and careful and flexible,” says Pedro Heilbron focused on obtaining the flexi - For more news, images Roberto Kriete, chief executive CEO, Copa Airlines bility they need while not losing and videos go to: of TACA. “We have lots of flexi - the focus on quality and cost flightglobal.com/ab bility in our fleet where half of it is leased. This gives us the op - tion of renewing leases if we FLYHT spells savings a different way want to grow, or we can return aircraft as contracts end.” TACA is planning zero capacity growth BY MIKE MILLER crew and maintenance issues more efficiently. One in 2009 at present. hen every minute counts, one company be - airline customer has discovered a 5% fuel burn Avianca chief Fabio Villegas Wlieves greater efficiencies can save Latin savings from AeroMechanical’s FLYHT product, says the Colombian carrier will carriers 3.5 minutes every flight. which competes with ACARS as a piece off cockpit continue its fleet renewal pro - AeroMechanical Services, which works with 32 reporting technology. gramme and it will add some ca - airlines, sees airline saving from aircraft data Airlines also are using the system to challenge pacity as Airbus A330s replace collection that can instantly tell whether a decision overflight fee invoices, since the system can identify Boeing 767s. This process will or flight is out of the ordinary. “Serious flight inci - airspace used. Hayden says Latin carriers also can greatly assist in its efficiency dents are reported in 18 seconds,” says Richard improve efficiencies by spotting aircraft operational drive. It will take some capacity Hayden, company president. procedures – such as single engine taxi – and track - out in 2009 as it retires its fleet Savings comes from accurate operational report - ing whether the crew onboard is actually following of 16 MD-80s, he says. ing, identifying errors more quickly, and tracking the fuel-saving processes the airline wants to use. I LAN boss Enrique Cueto says

MUSIC TO HER EARS...

PUBLISHED BY AIRLINE BUSINESS IN ASSOCIATION WITH AEROCOMM The lucky winner of the ‘business card draw’ for an iPod Nano – presented by Air DAILY editorial team Photography Visit us on the web: Transport Intelligence (ATI) – Mark Pilling Tom Gordon flightglobal.com/ab is Mirja Nissen, Lufthansa Geoff Thomas ©Airline Business 2008 Consulting's director of sales for Brendan Sobie Advertisement sales the Americas. All entrants who Graham Dunn Robert Hancock Got a story? dropped their business cards Mike Miller Come and see us at off at ATI's booth are also Printed by Lower level, entitled to receive a free trial Design & production Pixel Press, Coral Sea 2 of ATI's on-line information Amelia Clark Cancun service, the leading source for the transport industry.

flightglobal.com/ab November 2008 I Airline Business Daily @ ALTA I 3 NEWS

Volaris plans first US route for 2009 Mexican carriers will operate to 10 US airports as Southwest deal comes to fruition Steve Pattison (left) and Enrique Beltranena

BY BRENDAN SOBIE the ALTA airline leaders’ forum to flights from several gateways in transborder flights as well as on exican low-cost carrier announce the purchase of V2500 addition to its base at out - connecting domestic flights in MVolaris plans to launch its Select One engines from IAE. side . Mexico while Volaris will be able first route to the US by the end of He says Volaris’ memorandum Beltranena says Volaris and to sell tickets on connecting South - next year and operate to at least 10 of understanding with Southwest Southwest plan to select by the end west-operated domestic flights in US airports by 2015. prohibits Volaris from identifying of February which transborder the US. Volaris chief executive Enrique any specific US airports it is target - routes they will serve. Beltranena expects 78% of Beltranena say the carrier, which ing, but he says they are “the most He says Volaris has already the passengers flying on Volaris’ earlier this month announced a dense airports Southwest is utilis - begun working on a marketing new transborder services will be codeshare agreement with South - ing”. Airports with large South - plan to raise awareness of its brand point-point with the other 22% west Airlines covering new trans - west operations include Phoenix, in the US ahead of the launch of connecting onto domestic flights in border flights, will begin serving its Las Vegas, Baltimore, Orlando and sales. “It’s part of our plan,” he Mexico or the US. first US airport in the fourth quar - Fort Lauderdale. says. “It will be a total failure if we The deal with IAE announced ter of next year. He says Volaris’ On the Mexico side, Beltranena don’t do it.” yesterday makes Volaris the third new international operation will says Volaris plans to operate US Beltranena reveals the deal with Latin carrier to go with the up - begin small but rapidly grow as it Southwest appoints Volaris as the graded V2500 Select One engine takes delivery of additional Airbus “We’re targeting in the next exclusive operator on all Mexico- after TAM and TACA. Volaris is al - A320 aircraft. three to five years at least 10 US routes, meaning Southwest will ready a V2500 customer and IAE “We’re targeting in the next to 12 markets” not operate any of its own aircraft vice-president of the Americas three to five years at least 10 to 12 into Mexico at least for the foresee - Steve Pattison says the new engine Enrique Beltranena markets,” Beltranena said yester - chief executive, Volaris able future. But Southwest will be will reduce Volaris’ fuel burn by day during a press conference at able to sell tickets on Volaris’ 1% and time on wing by 20%. I Downturn sees TACA cut capacity

BY BRENDAN SOBIE markets continue to hold up economies remain relatively strong. uled to expire 2009. If there wasn’t entral American airline group despite the downturn. For example ’s a downturn TACA would have CTACA has decided to return As a result, TACA’s overall ca - other large carrier, Panama-based opted to extend some or all of these. several Airbus A320s to lessors and pacity will be flat next year, with Copa, last week said it still planned TACA currently operates 33 A320 cut capacity on North American the delivery of seven new Embraer to grow capacity by 13% next year. family aircraft and has 15 on order. flights in response to falling de - E-190s in 2009 offsetting the Kriete says privately-owned mand due to the current economic planned return of five or six A320s. NORTHERN EXPOSURE TACA is on pace to generate $1.1 downturn. Last year TACA ordered 11 E- But Kriete says TACA is more billion in revenues in 2008 and a TACA CEO Roberto Kriete told 190s, the first four of which Kriete dependent on the US market than modest profit. But given the eco - reporters yesterday during a press says will be delivered by the end of Copa and other Latin carriers. “We nomic downturn, particularly in conference at the ALTA airline this year. Kriete says the 10% ca - have a lot more exposure to US and the US, he says it will be difficult to leaders’ forum in Cancun that the pacity cut on North American North American markets than any stay profitable in 2009 and rev - carrier will cut capacity routes “is in line with of them,” he says. enues will likely again be around on Central America- what everyone else is He says TACA has been able to $1.1 billion. North America routes doing”, pointing out reduce its dependence on the US “I think 2009 will be a difficult by 10% next year and US carriers have made market over the last three years year,” Kriete says, adding the return five or six Air - similar cuts on their from 60% to 45% and is continu - carrier is now trying to reduce costs bus A320s to lessors. Central American ing to focus more on routes within where it can. For example to save But Kriete says the El routes. Central America and to South costs it elected recently not to Salvador-based carrier Most Latin carriers America and the Caribbean. But he acquire an E-190 simulator. has kept intact plans to have not yet matched adds: “You can’t do it all at once.” “It’s difficult to plan right now grow capacity by about the capacity cuts made Kriete says TACA had the flexi - because the fog is on the ground,” 10% on routes within by their US and Euro - bility to cut capacity on North he adds. “2009 is difficult to Latin America and to pean counterparts be - American routes because the leases forecast but we’ll try our best to be the Caribbean, as these cause the region’s on five or six of its A320s are sched - very profitable.” I

 I Airline Business Daily @ ALTA I November 2008 flightglobal.com/ab NEWS NEWS

Continued from Page 1 Pluna to get $50m more NCR sees revolution that long desired improve - ments in airspace and airports Biggest challenge ahead is closing deal with Uruguay government in Latin check-in could finally be achieved. This in turn could generate signifi - BY BRENDAN SOBIE settle everything,” Campiani says. that will need to be solved in the New generation technology set to speed things up cant cost savings just as the ermany-based investment After taking over the carrier in next few weeks.” industry enters a downturn. Gfirm Leadgate, which last year July 2007 Leadgate put about Pluna’s two unions have been BY MIKE MILLER “A lot of airlines in Latin Amer - companies. Cost savings is the “There was a commitment became the majority owner of $180 million into the airline. It threatening in recent weeks to atin American carriers could ica are evaluating non-ticketing “In Peru, and in other reason LatAm from both sides to work Uruguay’s Pluna, expects to forge has since restructured Pluna, strike the carrier. The unions, one Lgenerate oodles of extra money revenue, including international some places in airlines are explor - together to solve issues facing a new deal with the government changing its fleet and network of which covers the pilots and the and speed check-in for passengers web check-in and more uses for Mexico, you can go ing more e-options. the region,” de Gunten says. over the next few weeks and and reducing its costs. Campiani other the flight attendants and at the same time by implementing mobile devices,” says Alex Gonza - to a retail location Internet check-in “We had a good conversation.” pump another $50 million into says November or December will ground handling workers, new-generation self-service kiosks lez-Mir, NCR’s director Caribbean and pay for your costs less than ALTA’s new board, led by the carrier. be Pluna’s first break even month. combined represent nearly all 600 and paperless mobile check-in and Latin America. airline ticket,” he US$0.14 per trans - Kriete and Avianca CEO Fabio Leadgate’s relationship with “Our biggest challenge now is of Pluna’s employees. processes. Paperless boarding passes are says. “In certain action, while kiosk Villegas as vice president, is Pluna soured in August after closing the deal with the govern - Campiani says Pluna can’t afford NCR, which works with airlines being trialed by Delta Air Lines at [LatAm] countries, Alex Gonzalez-Mir check-in costs sure to make an improved rela - Pluna’s Leadgate-appointed man - ment and entering into an to give the unions salary increases worldwide, including Aeromexico, New York LaGuardia Airport, and there’s more access to phones than $0.14-0.32. But agent-based check- tionship with Latin America’s agement team decided to axe the agreement with both unions,” he but is confident a deal can be Copa Airlines and TACA in Gonzalez-Mir sees the day when the internet.” in costs $3.02, according to For - civil aviation authorities a top carrier’s only long-haul route. The says. reached with both unions before LatAm, says one airline customer passengers can travel without “We want to change the way rester Research, and those figures priority. Besides Kriete and two have since been arguing over “These are three big challenges the end of the year. I recently has generated more than paper. “Mobile is the revolution. business is transacted” in aviation, also apply to Latin America, Gon - Villegas, the new board recapitalisation and an unpaid $100 million in non-ticket revenue The ability to put bar codes on any says Eduardo Rozen, NCR airline zalez-Mir says. “Latin carriers can comprises of Heilbron, LAN fuel bill with Uruguay’s national in less than two years via cross- mobile device will allow the and hospitality account executive, save one [airport agent] for every Close to a new CEO Enrique Cueto and TAM petrol company. selling at the point of check-in. passenger to check-in and receive noting that Latin America is slowly four kiosks deployed,” and with deal: Pluna CEO president David Barioni Neto. But speaking to Airline Business This includes kiosk-based up - an IATA-approved bar code, go moving away from getting a paper airport space at a premium in Matias Campiani Kriete, during his closing re - Daily , Pluna CEO Matias Campiani grades, paid stand-by, change fees through security, fly and check in signature on a receipt with a logo many LatAm airports, space effi - marks, called on ALTA mem - says Leadgate is close to complet - and other choices. paperlessly at hotels and rental car or seal. ciency is increasingly a factor. I ber airlines to have a “very ing a new deal with the Uruguay special approach to our em - government. The deal will settle the ployees” this year during the unpaid fuel bill, mainly through the global economic downturn. government taking back ownership ALTA vows to treat its mem - of a hotel that Leadgate took as part bers and affiliate members as of the original deal. “customers” and thanked them Campiani says Leadgate also has for the vital role they play in the agreed to put another $50 financing of ALTA activities. I million into the airline. “We’re negotiating with them to ‘No panicking’ from Caribbean carriers

BY BRENDAN SOBIE in response to high peak season month it opted for a wet lease to everything we can, working with aribbean carriers have not yet demand the carrier is resuming give it the flexibility to quickly Jamaican authorities, but it will be Cnoticed a drop in demand services to Chicago and launching return the aircraft should there be a challenging year.” and remain confident they can services to Washington in Decem - a downturn. So far promotions have helped weather the current storm. ber. But he acknowledges “there is Darby says unlike in past down - keep Air Jamaica’s bookings LIAT chief executive Mark Darby a concern beyond that”. turns, when LIAT would refuse from sinking significantly but says the Antigua-based regional While there has been little to no to cut capacity, the carrier this Nobles says “what we’re seeing carrier “had its first profitable Oc - impact yet on bookings, the time is willing to make cuts. “We is people are clearly taking tober ever” and has not yet noticed region’s carriers are prepared to have to be prepared to put aircraft longer to decide”. any sign of a downturn. “What quickly react should the down - on the ground and ride it out,” Air Jamaica is now going we’re not doing is panicking,” turn start to impact their busi - Darby says. through a major restructuring, Darby told the forum yesterday. nesses next year. For example, with Nobles trying to cut costs Speaking on the same panel, Filiatreault says Cayman is look - STIMULUS NEEDED while Jamaica’s government looks Caribbean Airlines chief executive ing at potentially leasing out some To combat a potential downturn, to sell the . Nobles says Philip Saunders agreed: “We’ve of its capacity for the 2009 off peak Air Jamaica chief executive Bruce the carrier is now talking to a seen no reduction in demand. In summer season, something it has Nobles says the carrier is now number of potential investors fact it’s been exactly the opposite. never done. working with Jamaica’s hotels to from both inside and outside the We’ve seen robust growth.” Saunders says Caribbean is not try to stimulate the island’s industry. “It’s a very time to go Cayman Airways chief executive “naïve” about the future and tourism market. “We need to give through this process but some - Gilles Filiatreault says bookings re - points out that when Caribbean people stimulus and reason to times bad times are good times to main solid through Christmas and added an aircraft earlier this come to Jamaica. We’re doing make an investment,” he says. I

8 I Airline Business Daily @ ALTA I November 2008 flightglobal.com/ab flightglobal.com/ab November 2008 I Airline Business Daily @ ALTA I 9 INTERVIEW I JOSE LUIS GARZA AWARDS I NETWORKING For more news, images and videos go to: flightglobal.com/ab

REPORT I BRENDAN SOBIE Going out with a bang: LEADING MEXICO’S Drummers bring a rhythmic “HIGH EFFICIENCY AIRLINE” (and loud) end to the has moved fast to set up a large operation at Mexico City, says its CEO Jose Luis Garza evening

nterjet may be one of prevail in the legal challenge. Mexico’s four remaining “The slots at Mexico City are like a poker Ilow-cost carriers but chief game. You need to get a seat at the table to executive Jose Luis Garza doesn’t like to use understand how to play,” he says. “We’re now the term low-cost. in position to play the game, despite them Interjet, Garza points out, offers a complete [legacy carriers] not liking us there.” range of frills, has more legroom than any other Mexican carrier and now serves the US APPROVAL country’s biggest and most important airport Interjet, which launched in late 2005 and PLANE for business traffic. “I’m not a low-cost expects to carry three million passengers this company. We’re inspired by the efficiency of year, needs more slots at Mexico City to sup - low-cost companies. We prefer to be called a port domestic expansion as well as planned high efficiency airline rather than a low-cost flights to the US. The carrier earlier this year carrier,” he says. secured US regulatory approval to launch TALKING Garza says Interjet needs to offer a good services to Ontario, and San Antonio product because it focuses on corporate from Toluca but Garza says there is better Pedro Heilbron, out-going ALTA president and the chief exec - Delegates enjoyed an evening traffic. Mexico’s other low-cost carriers, potential business for these new planned serv - utive of Copa Airlines, took centre stage at Thursday night’s of networking and celebrating namely Volaris, Click and VivaAerobus now ices if there are switched to Mexico City. He gala dinner as he received the Federico Bloch award for an the industry’s finest, or not, in that ALMA and have ceased opera - explains: “it’s easier for TSA security reasons” outstanding contribution to the Latin aviation industry from the case of airports tions, are more focused on the leisure market. “We prefer to be called a to operate to the US from Mexico City “and it’s Enrique Borgo Bustamante, former vice-president of El While some of these carriers match Interjet high efficiency airline much easier for marketing reasons” as US Salvador and ex-president of both ALTA and TACA. in offering food, beverage and in-flight enter - passengers are not familiar with Toluca. And the winner is: Pedro Heilbron Heilbron has led Copa for 20 years, building the Panaman - tainment, Garza says the key differentiator is rather than a low-cost While Interjet aims to eventually serve a few receives the Federico Bloch Award ian carrier into a strong and profitable force in Central Amer - legroom. While Interjet only has one class, it carrier” points in the US, Garza says its transborder from Enrique Borgo Bustamante ica. In a note of congratulation, former Continental Airlines configures its 13 Airbus A320s with only 150 Jose Luis Garza operation will be a small side business. head Gordon Bethune, who was instrumental in the US car - seats, compared to the 180 typical for low-cost chief executive, Interjet “Interjet is essentially a domestic carrier. Our rier buying into Copa in 1998, said: “The bottom line is that carriers. That translates into a generous 34in international expansion will be limited except Copa helped put Continental on the map in Latin America.” pitch. “We sacrificed 30 seats in the aircraft to fact Interjet was preparing to slash capacity to routes where we have a competitive advan - The Captain Rodolfo Rolim Amaro award, that recognises have a good quality product,” Garza says. by 40% and return six A320s until the tage, where we have a niche,” he says. outstanding customer service at airports or air navigation Interjet’s biggest selling point these days, opportunity to buy slots from Aerocalifornia Although business passengers prefer Mexico service providers, was not presented this year as no however, is its new network at Mexico City’s suddenly became available. City International because it is much closer to candidate met the criteria. slot controlled downtown airport. The carrier “Fortunately that plan was never put into the downtown business district than Toluca and The sponsors of Thursday night’s dinner, Airbus, used the launched services at Mexico City International effect and we were able to get Aerocalifornia’s has longer operating hours, Garza says Interjet occasion to celebrate a remarkable collective deal to sell its in August after acquiring 50 slots from slots and fast entry into Mexico City,” Garza plans to restore some of the capacity it has taken aircraft to three critical Latin carriers. The so-called ‘three grounded carrier Aerocalifornia. says. “Now it’s just the other way around and out of Toluca to make room for the Mexico City amigos’ deal in 1998 saw LAN, TAM and TACA jointly plac - we’re anticipating accelerating our expan - operation. “We don’t want to abandon Toluca. ing a large order for Airbuses in what Barry Eccleston, chief KEY DESTINATION sion.” We want to expand there. That’s why we need executive of Airbus Americas, called a milestone for the Interjet has long eyed access to Mexico City Garza is now looking for more A320s and additional capacity,” Garza says. “If we leave manufacturer in the region. Based on the current order International as it is a key destination for its more slots. Garza in particular is eyeing the some vacuum probably Volaris will take it.” backlog, by the end of 2010 Airbus will have a 50% market business passengers. slots held by , a struggling legacy While 2008 has been a difficult year for all share of the aircraft in service in the region. I Garza says while costs are higher at Mexico carrier which Interjet almost acquired early Mexican carriers, Garza says the new Mexico City International compared to Toluca, this year. Garza says he walked away from the City operation should help Interjet break back I The night’s music was sponsored by PowerJet – the JV between NPO Saturn and Snecma to power the Sukhoi Superjet 100 RJ Mexico City’s alternative airport where Interjet potential deal with Aviacsa because “the into the black in 2009. He says Interjet needed a is based, yields are on average 15% to 20% carrier was in the red and had high debt and $40 million capital injection back in April and higher. “The most important thing is revenues. the price was outrageous”. But he believes Avi - its owners remain supportive with the expecta - The revenues are far better in Mexico City,” acsa remains weak and could become Mex - tion that an initial public offering will eventu - he says. ico’s next airline casualty. ally be pursued. Gaining access to Mexico City was so criti - Securing any slots which become available “It’s always been in our business plan to go cal to Interjet Garza says if it couldn’t get slots may not be easy as Interjet is already fighting public in the future,” Garza says, adding there there it would have been forced to “drastically a legal challenge lodged by other carriers seek - is no rush and when the IPO is reduce its fleet and fixed costs in order to ing to undo its slot transaction with Aerocali - done will depend on market recover profitability for the rest of the year.” In fornia. But Garza is confident Interjet will conditions. I

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