Tuesday, May 4, 2010

Airline Geekery: Mergers and Marketing in Latin America

While the press and traveling public gawk at the news of merger of United Airlines and Continental Airlines, another move towards industry consolidation is taking place south of the border. Last month, Brazil's OceanAir (yes, in English), started a few years ago by Colombo-Brazilian multimillionaire Germán Efromovich, adopted the brand name of its much larger Colombian sister airline, Avianca, also owned by Efromovich's Synergy Group. With this re-branding, the airline hopes to move up from its position as Brazil's fifth-largest carrier, offer international flights from Brazil, and become a recognized name in the region. Avianca is following in the tradition of Chile-based LAN Airlines and Central American conglomerate Grupo TACA (with which it merged last October, forming the double-branded Avianca-TACA) in cross-border airline mergers and branding, turning national airlines into continental carriers.

El Salvador-based TACA was the first airline to jump into multinational consolidation in the early-90s by investing in the flag carriers of its neighboring countries: Aviateca of Guatemala, Lacsa of Costa Rica, and NICA of Nicaragua. Though maintaining different owners (with Lacsa retaining its airline code), the combined company created one brand identity and focused hub operations at San Salvador and San José, then later at Lima when TACA Peru signed on.

TACA's merger with Avianca, in which both airlines will continue to operate under their respective brands, is the largest of the various mergers and acquisitions that Avianca has undergone in its history as the world's second-oldest existing airline. After engulfing several smaller Colombian airlines, Avianca bought the tiny VIP in Ecuador and its new owner, Efromovich, started OceanAir in Brazil, both of which are now called Avianca in their respective countries, though they continue to function separately under local operating certificates.

LAN, the largest airline in Spanish-speaking Latin America and one of only a few anywhere that can fly you to Tahiti, works similarly; the Chilean branch and its subsidiaries LAN Peru, LAN Argentina, LAN Dominicana, and LAN Ecuador all operate with differing certificates, but unified branding. LAN also bypasses its hubs at Lima and Santiago, with nonstop flights from Miami to Bogotá, Caracas, and Punta Cana, furthering the concept of LAN as a super-national airline brand and having dropped the name LanChile years ago (they also have a thrice-weekly JFK-Toronto hop).

As the global airline industry contracts for its own survival, the major US carriers whittle themselves down to a handful of legacy (i.e. old-as-dirt) and low-cost brands, unable to merge with foreign airlines because of US legal restrictions. The major Latin American airlines, much like Air France-KLM or British Airways and Iberia, are steeling themselves for the future of air travel by offering broad networks and convenient transfers that transcend national frontiers. And now you've got three (or two?) more options for heading down Argentine way:

Avianca: Non-stops from Miami and New York-JFK to Bogotá, Medellín, Cali, and Barranquilla; Miami to Cartagena; and Fort Lauderdale, Los Angeles, and Washington-Dulles to Bogotá. Connections to all major South American cities through Bogotá.

LAN: Non-stops from Los Angeles, Miami, New York-JFK, and San Francisco to Lima; Miami and New York-JFK to Santiago; New York-JFK to Guayaquil and Toronto; Miami to Bogotá, Buenos Aires, Caracas, Punta Cana, and Quito. Connections to all major South American cities through Lima and Santiago.

TACA: Non-stops from Chicago, Dallas, Houston, Los Angeles, Miami, New York-JFK, Orlando, San Francisco, and Washington-Dulles to San Salvador, with connections to all major South American cities; Los Angeles, Miami, and New York-JFK to San José; and Chicago, Los Angeles, and Miami to Guatemala City.

Fly Brother welcomes your views. If this post hit the spot, please comment and/or click.


A Cuban In London said...

In the meantime Cubana is not merging with anyone. Tough luck. :-)

Thanks for this insight into the travel industry, my own professional field many years ago.

Greetings from London.

Fly Brother said...

Pobre Cubana...I still have a Sol y Son magazine from a few years ago.

Good to see you back round these parts, Cubano.

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