Accelerating plans in the face of the contingency imposed by COVID-19 in the world, JetSMART prepares its landing in Peru for 2021. Highlighting its ability to take on opportunities that arise, the South American airline of Indigo Partners LLC, anticipates a rapid entry into the country Andino to place capacity and take up space left by other operators, in addition to developing routes.
Landing in Peru is a natural step in JetSMART’s expansion to establish an ultra-low-cost, low-fare (ULCC) model at the South American level. From the company they indicate that the pandemic and the crisis derived from it forces to modify the business model in time, but not in essence.
“One issue for us is to be very proactive,” says Estuardo Ortiz, CEO of JetSMART. “You have to assume that the (domestic) recovery is not going to be completed before 2021, it will be sometime in 2022, so we have to take the planes to where the passengers are.”
Regardless of the formalities involved in establishing a new operation, it highlights that as a company they already have a long way to go prior to the COVID-19 crisis, although without an urgent need. JetSMART has been cultivating a brand so that the Peruvian people know us, especially with the five routes that connect Chile and Peru. The exit of Peruvian and, later, of Avianca Peru help to open the entrance door to be a local operator and take opportunities that are not attended. However, they recognize that due to the current situation it will be a very competitive market where there will be challenges for which they are prepared.
The intention of JetSMART is to start operating within Peru with two to three aircraft that could increase to five in the short term. Initially, the Peruvian fleet will be built with the capacity adjustments expected in the Chilean market as a result of the reduction in demand imposed by COVID-19.
“We always like to start fast from about five planes. It is necessary to start with a minimum so that operationally to have sustainability and good service: two and three planes to quickly go up to five planes and then continue with growth as the market responds and the use of the fleet that we have, ”says Ortiz. “If we leave the aircraft in Santiago all this time, we will have planes on the ground in December 2021. The most practical thing is to take planes from Chile to Peru, something like we did in Argentina.”
Following the philosophy of the ULCC business model, the strategy is to enter aggressively by placing a high capacity to develop trunk and secondary routes, according to the point-to-point flight strategy. Subsequently, there is the development of the international network that is designed for a later stage due to the strategic geographical location of Peru. Currently, the fleet is made up of 11 Airbus A320ceo / neo based in Chile and another four aircraft in Argentina.
“As we did in Chile, in Peru there is room to create routes. Geographically, it has the great advantage of being able to reach many highly attractive international destinations: there is North America, Central America, Mexico, the Caribbean, you can fly to the North or South of South America. It has a lot of diversification of possibilities. In addition, there is the synergy with the current network. We fly from Chile, we are about to fly from Argentina ”, explains the CEO of JetSMART.
Officially, the plans consider an operation during the first half of 2021, but they assure that it will probably be at the end of that period, taking into account the necessary procedures, certifications and also the evolution of demand or eventual changes in the competition. JetSMART expects that by that date the Peruvian domestic market will have about eight or nine months of operation, so there would be a greater demand compared to current times.
The commercial strategy bets directly on the price factor as a tool to encourage travel and stimulate the market. With a high utilization of the fleet, the aim is to develop the greatest number of routes and then make synergies with the operation in Chile and Argentina. Subsequently, the Peruvian subsidiary can continue its growth in international markets. “The market is very peculiar, but we know it well,” says Estuardo Ortiz, recalling his time at TACA.
Cover photo – Simón Blaise
Author Ricardo Delpiano