June 23, 2021

Aviation Club Center

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[ Colombia] Exclusive interview with Santiago Álvarez, CEO OF LATAM Airlines Colombia

6 min read

  1. How is the situation today in LATAM?

In LATAM Colombia we are in 83% of the recovery of supply and in July we will reach 100% recovery with the growth forecast for the second half of the year. This is driven by a strong strategy of low prices and flexibility that, together with the clear opportunities for participation generated by the reconfiguration of the local air market, allows us to continue growing and advancing in our goal of achieving a 30% local market share.

During 2021 we have inaugurated 5 domestic routes, including Barranquilla, Medellin and Santa Marta from Cali and the direct routes Medellin – Monteria and Bogotá – Pasto. This allows us to be more competitive in the face of the clear growth opportunities that are being presented in the Colombian air market. With these new routes, we seek to decentralize the offer from Bogotá to offer our customers more convenient and direct options.

In addition, this month we reactivated the Bogotá – Miami route and inaugurated the Bogotá – Armenia routes. In July, Bogotá – São Paulo will also be reactivated and in the coming months, Bogotá – Guayaquil will begin connecting Ecuador with Colombia.

  1. How can you define for me what 2020 was like, and what role did cargo play within the airline?

2020 was the most complex year of the airline industry in its history and, in that sense, the results of the operation were far from what was expected. The effects of the pandemic led LATAM to enter into a process of corporate reorganization under Chapter 11 of the United States and in the specific case of Colombia, after several months without operation, we closed the year mobilizing approximately 35% of the passengers planned for 2020.

During those months of inactivity, the cargo operation in Colombia played a very important role in transporting essential inputs to the island of San Andrés, reaching a total of 3,719 tons transported.

Despite this, in Colombia the pandemic generated a reconfiguration of the air market with clear opportunities for participation, promoting greater competitiveness that today allows passengers to have a broader, more affordable and diversified offer.

In that sense, LATAM Colombia closed 2020 with 14 domestic and 3 international routes reactivated, allowing us to advance our goal of reaching 30% market share.

  1. How do you live in Latin America this invasion of wide and frequency strapping planes everywhere?

Within our fleet we have different models that allow us to meet the needs and transport demand of our passengers. In this sense, wide fleque aircraft are focused on serving international routes to destinations such as Miami, Sao Paulo, Guayaquil and Lima.

In our case, the Bogotá – Miami route was reactivated on June 2 and is flown by a Boing 787.

  1. Is it time to open national and international routes or a combination of both?

The air restrictions in force in some of our destinations, together with the scenario of reconfiguration of the air market in Colombia, have shown clear opportunities for growth for LATAM in the country.

Therefore, we lead the diversification of the market by offering passengers more direct and convenient options. Today our operation is composed of 80% domestic flights and 20% international flights. So far this year we have opened 5 domestic routes including Barranquilla, Medellin and Santa Marta from Cali and the direct routes Medellin – Monteria and Bogotá – Pasto. In addition, in the coming months, we will start the operation of the Bogotá – Armenia route and strengthen our connection from the city of Medellin.

This month we reactivated the Bogotá – Miami route, in July Bogotá – São Paulo will also be reactivated and in the coming months, Bogotá – Guayaquil will begin connecting Ecuador with Colombia and thus, we hope to resume the international destinations that we handle pre-pandemic as the air restrictions are lifted.

  1. Do you see Medellin in the near future as a national and international HUB for LATAM?

Medellin is a key city to decentralize the operation that is currently concentrated in Bogotá, being in recent years a distribution center for LATAM in Colombia.

Therefore, we continue to expand the alternative routes that fly to and from Medellin that seek to provide passengers with more direct alternatives when flying: in July the operation of the Medellin-Cucuta route will begin with seven (7) weekly frequencies and in August, direct flights to Bucaramanga from Medellin with four (4) weekly frequencies. In addition, we will increase the frequencies of 8 routes operated from Medellin and Cali, achieving 35 additional frequencies for the month of August.

  1. This aeronautical Utopia has an expiration date: how do you think you can get out as little hurt as possible?

For LATAM Colombia the best way to do this is to continue betting on the domestic market, driven by a strong strategy of low prices and flexibility that, faced with the scenario of reconfiguration of the local air market, will allow us to continue growing and advancing in our goal of reaching a 30% local market share.

Right now, and with that in mind, we will achieve 100% recovery of our supply in July, finally reaching the pre-pandemic levels of the same month in 2019. In turn, we will execute a growth plan that will allow us to increase by 20% the seats offered on domestic routes, add two new destinations from Medellin: Cucuta and Bucaramanga, increasing our coverage to 15 domestic destinations with 27 routes, and increase the offer of the routes operated from Cali and Medellin.

  1. In Colombia there is an event of openings of routes and arrivals of Airlines, what do you think may be happening?

The clear growth opportunities generated by the reconfiguration of the market in the wake of the pandemic have fostered greater competitiveness in the sector and attracted the interest of several operators.

Particularly, from LATAM this has materialized in the strengthening of our growth strategy in the domestic market that today represents 80% of our operation and allows us to reach destinations where traditionally the supply had been concentrated in a single operator.  

  1. How long do you think LATAM Colombia will once again be in pre-pandemic times?

In Colombia we will recover 100% of our supply in July, finally reaching the pre-pandemic levels we managed in July 2019. However, we are subject to how the social situation in the country and the pandemic continue to develop. The LATAM Group expects to be operating between 60 and 80% of the pre-pandemic operation by the end of this year in the region.

For now, we expect that our current strategy based on a cost-efficient model and an operation marked by safety and strict biosecurity protocols, together with the strong investment in aircraft and new routes that we will make in the second half of the year, will continue to respond positively to the market behavior.

  1. How do you see the competition today?

The reconfiguration of the Colombian market means that there are opportunities for growth and with this interest of many operators. LATAM is clear about this and is being a protagonist to diversify the market and reduce the levels of concentration in a single operator.

In LATAM we have a competitive business model, financial strength in the midst of the crisis, the support of the LATAM Group, which is the largest operator in Latin America and with an unbeatable cost structure to take advantage of these opportunities. Without a doubt, the key here is the costs and those who manage to have the right costs are the ones who will be able to overcome the crisis and come out stronger.

  1. What did LATAM learn from the pandemic?

The pandemic has been a very challenging chapter for the industry and led us to rethink many aspects of strategy and our business model. It taught us to understand the importance of having a variable cost structure to have a lighter and more efficient company.

Today, thanks to these months we have learned to make much simpler and more agile decisions that allow us to satisfy the passenger experience when flying; offering you flexible rates and conditions, with service channels always open and available.

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