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Avianca Combats New Budget Competition With Point-to-Point Routes

Edward Russell

September 3rd, 2021

Avianca sees the proliferation of discount carriers as its main competitive threat as it emerges from its Covid-19 pandemic induced restructuring. And for good reason, JetSmart, Viva Aerobus, Viva Air Colombia and Volaris have all used the crisis to expand deeper into Avianca’s territory from Colombia to Costa Rica and El Salvador.

In the reorganization plan Bogotá-based Avianca filed with a U.S. Chapter 11 bankruptcy court in August, the airline said competition from low-cost carriers has “compelled [it] to further adapt its business model” to meet the growing threat. One way it is doing this is adding seats on its narrowbody jets where Airbus A320s will have up to 186 seats — the same number as on many of its budget rivals.

Avianca also is hitting back against the new competition by diversifying its route map. The airline is adding a slew of point-to-point routes that offer nonstop options to travelers that bypass its Bogotá — long the center of Avianca’s hub-and-spoke operation — and San Salvador hubs. Most recently, Avianca unveiled plans to connect Cali and Medellin with Buenos Aires, as well as Bogotá with Cordoba, Argentina, with either Airbus A319s or A320neos, in a request to Colombian authorities.

And earlier in August, Avianca unveiled plans for 22 new international routes that largely bypass its hubs. Bucaramanga, Cali and Medellin, Colombia; Guayaquil and Quito, Ecuador; and San José, Costa Rica, will all see new service to points in the Caribbean, northern Latin America and the U.S.

Point-to-point service has long been the hallmark of ultra low-cost carriers. The airlines fly to meet demand and not through a set hub. For example, while in Chile JetSmart offers many routes to Santiago, it also offers the most nonstops — five to Latam Airlines’ two — from the coastal college town of Concepcion in September, according to Cirium schedule data. And closer to home for Avianca, El Salvadoran authorities recently signed off on Volaris’ new local subsidiary that will fly nonstop routes from the country — likely from San Salvador — to places other than Mexico. Volaris management has indicated that new service to the U.S. is likely.

“Avianca expects to build on its core strengths, including its … brand recognition [and] its market leadership position in the vibrant Latin American airline market … in order to emerge from these Chapter 11 cases as an elite competitor for years to come,” the airline said in its reorganization plan. These are assets that will undoubtedly benefit it as it goes up against the raft of new budget competitors.

Edward Russell

September 3rd, 2021

Photo credit:  Flickr / Bernal Saborio G/berkuspic)

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