Low cost airlines conquer Central America

Twenty years ago the segment of low-cost airlines took off, mainly in Europe and the United States.

Latin America first saw the trend in emerging markets, such as Brazil.

In the case of Central America, the flights have begun to arrive with a little delay, but each day they are strengthening in the market.

Low cost airlines conquer Central AmericaThe boom has occurred especially in Panama and Costa Rica, which have operations of companies such as Viva Colombia, Wingo and Volaris.

Through the skies of the Northern Triangle there have also come brands such as Transportes Aéreos Guatemaltecos (TAG), Interjet that goes to Mexico and the United States, while Spirit Airlines also flies to and from the USA.

The last to make its landing was Volaris that established in 2015 its subsidiary for Central America in Costa Rica and its bet is to conquer those who have not yet lived the experience of flying.

The Costa Rica-Guatemala route was the first to open and has joined Costa Rica and El Salvador since February with rates starting at $74.94 for a simple trip between San Salvador and San Jose.

“The objective of Volaris is to conquer Central America,” said Enrique Beltranena, CEO and founder of the airline, who in a three-year plan expects to operate between 18 and 22 aircraft on the isthmus alone. That plan also includes the arrival in Managua from San José in April.

According to Beltranena, between 2011 and 2015 there was a contraction of seats offered in the market, which was reported as being approximately 3.3% per annum, due to the high tariffs registered in the region. “Per capita GDP grows, population grows and the middle class grows. so why do people not travel, why do they not use the plane as a means of transportation and why does the plane not become the basis of economic development of the region? And that is why the entry of Volaris is important,” said the airline manager.

The company that was born in 2006 in Mexico wants to conquer those who travel by land. Just as an example, between Nicaragua and Costa Rica, there are more than 490,000 trips per year made by land; from El Salvador to Costa Rica there are around 200,000.

The payment of taxes in Central America, being a small region, can access another nation in a short time and, therefore, it is an attractive area for the “low cost” airlines.

Still, there are some problems for these companies, says Carlos Ozores, director of ICF, a firm specializing in the aviation industry.

These are mainly the airport and government taxes that apply to international travel in Latin America.

In the case of Central America, in Panama airport and government taxes on simple domestic flight tickets are $11 and $61 for international flights, an amount that doubles the rates paid in Brazil where domestic flights pay $9 and international ones $34.

Ozores points out that “economic and migrant ties within Central America, and between this region and the United States, are quite strong. However, air connectivity is often deficient and costly.”

In the same vein, Beltranena said that in Costa Rica $20 more tax is paid than in El Salvador. Despite this, the flat-rate structures of low-cost airlines seem to gain ground.

Wingo, which belongs to Copa Holdings, began operating in December 2016 and by February of this year had already reached $10 million in sales, said Manuela Muñoz, a spokeswoman for Wingo.

The firm has sold more than 200,000 tickets and carried 100,000 people on 16 routes: five domestic and 11 international routes in nine countries and five cities.

The route that Wingo offers from Cartagena (Colombia) to Panama landing at Panama Pacifico Airport costs $99, a rate 30% below that offered by the current market, Muñoz said.

Leave a Reply

Your email address will not be published. Required fields are marked *