Can Avianca-TACA unseat Panama's Copa?

Last week Colombia's Avianca and El Salvador's TACA announced they were getting together to create new Latin American airline force. Big news and a journalistic dream just one week before the ALTA Airline Leaders Forum when all the major players gather in Cartagena, Colombia for their annual meeting.

As it happened, I had scheduled to visit Panama on my way to Cartagena with meetings planned with Copa executives and officals from the city's Tocumen International Airport.

No better time then to ask Copa CEO Pedro Heilbron what he thinks about Avianca-TACA.

Here's Pedro being interviewed on the same subject during a ceremony today to mark a new phase of expansion at Tocumen Airport (see related story here).

Here's the story that I'm going to post to our sister service Air Transport Intelligence later, but you are getting it first fine Airline Business blog reader because this blog is working but my VPN to send this story is not!

Network strength will enable Copa to resist merged Avianca-TACA

Mark Pilling, Panama City

The strong position Copa Airlines has built up over the past decade at its hub in Panama will prove its best weapon to combat any increased competitive threat from a combined Avianca-TACA, chief executive Pedro Heilbron told Airline Business in an interview at his headquarters in the central American city.

Speaking a week after Colombia's Avianca and El Salvador-based TACA announced their strategic tie-up, Heilbron acknowledges that Copa will carefully watch how the new entity moves forward but will not alter the disciplined business plan.

Over the past several years Copa has grown to become one of Latin America's most profitable airline groups.

"When they get together they clearly become our main competitor, but the truth is our own network is solid enough and unique enough and highly defensible," says Heilbron.

Copa competes with TACA's hubs at San Salvador in El Salvador for Central American traffic while its 100%-owned unit Aero Republica is expanding in the Colombian market.

The Avianca-TACA deal was not unexpected, says Heilbron. "We knew given the financial situation in the world at present and in particular of those two airlines that it was in their best interests to do something.

"The way we see it is that it is still in our hands to remain the leading intra-Latin American carrier," says Heilbron. "It is up to us to keep doing the necessary investments to maintain our leadership position."

Copa and Aero Republica have built up a fleet of 58 Boeing 737s and Embraer 190s and a handful of MD-80s and have more 737s and 190s on order.

In Panama Copa also has an advantage because the state-owned airport operator is investing in expanding the airport and keeps its charges competitive. "Having an airport that plays ball is important. It has new facilities and is being expanded again," says Heilbron.

In contrast, Colombia's Bogota El Dorado airport is congested as is another TACA base at San Jose in Costa Rica, he says.

"We feel our space and opportunities are not dependent on what they do. So what we are going to do is more of the same. We are going to stay the course," says Heilbron.

So, can Avianca-TACA unseat Copa? To be honest I think that's a tall order.

Single-minded Copa has build a strong fortress at Panama and a well-functioning hub system. It has four banks a day at Tocumen with a hour connecting time max. Around half of its traffic connects.

Let battle commence!