By Ricardo J. Delpiano
is one of the principal routes of Chile and is currently one of the points at which focuses the discussion on the merger of LAN and TAM, detained since last January when a consumer agency ( CONADECUS) brought an action to stop the process on the grounds that the merger would threaten competition. Although both airlines operating synergies been pursuing since late 2007, the Court of Defense of Free Competition has considered the application host CONADECUS making consultations with each party before ruling on whether to approve or reject the merger.
Considering the overlap created by the merger of three routes and anticipating possible questions, LAN and TAM had a mitigation program to create mechanisms to ensure fair competition on the route under the scenario of LATAM Airlines SA Agreed with the National Economic Prosecutor, the plan included eight points issues concerning routes, frequencies, capacity offered and alliances, a volunteer effort, not least that it is rarely seen in air transport, including an assignment of slots and mechanisms interline agreements, which could become an opportunity for other operators looking to enter the Santiago-Sao Paulo route, such as Sky Airline and has been known in recent days would also be the Brazilian GOL.
GOL could be one of the companies that could enter the route to Sao Paulo and compete with the future LATAM. Photo: Ricardo J. Delpiano
Sky Airline is currently developing its international expansion plan by opening flights to neighboring cities such as Arequipa, Lima, La Paz and Buenos Aires, through a strategy that will enable the company to grow in the competitive international segment, not enter into competition with the large 1:1. For this the company is renewing its fleet with Airbus A320 aircraft best suited to operate these routes, which already has four units in service.
covers and the main cities, Sky Airline is focusing its objectives to reach Sao Paulo, not only to incorporate the city as a destination to its network, but to become a hub to the rest of world . To this end, the strategy aims to harness the large number of airlines operating in Sao Paulo (especially European, African and Asian) to achieve significant commercial agreements that will make Sky Airline in a feeder company of them. Today, the company has authorized seven frequencies per week between Santiago and Sao Paulo, which would provide at least one flight per day, although its intent is to have at least two flights a day needed to provide connections on two different time slots during the day. In this regard, a tender route, transfer of slots from the merger LAN-TAM (voluntary or not), is a key opportunity for the airline.
However, no Sky Airline would be the only one who could enter the route. On Monday, the newspaper El Mercurio published the possible intentions that GOL would have to resume flights between Sao Paulo-Santiago in the near future. In an interview with the vice president of marketing for the low cost Brazilian Claudia Pagnamo, the company noted that this path is in "radar" but without disclosing any dates or under that scheme would perform the operation.
GOL currently operates only one daily flight on the route Sao Paulo-Buenos Aires-Santiago, after a sharp contraction of its range since 2008/2009 when the company operated five flights daily Santiago: two nonstop Sao Paulo-Sao Paulo Santiago and three-Buenos Aires-Santiago (one of them via Porto Alegre). These services, also added the Santiago-Lima and then a frequency that came from Buenos Aires. In the nearly five years the company has been operating in our country, GOL has had different results in their operations, while longer haul flights (such as Sao Paulo and Lima) had poor results due to low occupancy and the difficulty to introduce low cost model in long-term routes, the shorter lengths the company and Buenos Aires maintained a good level of occupancy, as best evidence is that the airline has decided to keep. This was accompanied by the global crisis that hit the air during those years, inherited the consequences of the acquisition of Varig that complicated the plans of the airline and the increased offer from the competition, variables that influenced the redefinition strategy of the company.
With a more optimistic picture, GOL seeks to recover some lost ground at a time is also key to the future of the airline, considering the possible creation of one of the largest companies in the world. Therefore, it has decided to concentrate on the market Brazil, the strongest segment of the business model developed by the company, but also strongly committed to the international segment with the launch of flights to the Caribbean by Varig, taking advantage of the strong tourist traffic from Brazil to those countries. In both cases, the emergence of new class C (a new Brazilian middle class) in air passenger traffic in Brazil has been essential to grow and increase the number of sales and is where GOL has set his goals. The new strategy has begun to bear fruit, getting for example that in February in Brazil have mobilized more passengers per plane than by bus or GOL is the leading company in Brazil, as far as regards market share, with 39.7% of domestic flights, beating TAM since February.
Focused more to our reality and taking the interests of the company expressed its executive, the improved economic situation in Chile, plus the increase in passenger traffic and a more favorable exchange rate for travel abroad, are interesting variables that can help shape a new strategy for GOL for the Chilean market, especially considering that the Brazilian company's LAN-TAM merger does not significantly affect the scenario in our country.
plans of both companies are interesting options to explore in the future and can be key in shaping the scene of the following months, especially if associated with the merger process being carried LAN and TAM. Also help to increase supply and alternative travel to a country that concentrates a large number of destinations that are frequented by travelers Chileans.
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