Canary Islands regional carrier Binter Canarias is looking to expand beyond its inter-island air service, as it seeks growth and enhanced profitability.
The airline, bought from Iberia in 2002 by a group of Canary Islands investors for €60 million ($73 million), connects the archipelago's seven islands. The carrier's all-ATR 72 fleet last year carried 2.4 million passengers, mostly community traffic.
Binter Canarias has just begun taking delivery of six new ATR 72-500s, and will use the longer-range version to replace around half of its 13 older ATR 72s. The new type will enable Binter to serve the African mainland. Speaking at the handover of the first ATR 72-500, new managing director Andreas Blass told Flight International that he sees Africa as one of the keys to "jumping out of our niche", and says he will look carefully at Moroccan destinations Agadir, El Aaiun and Marrakesh, now within range.
Binter also wet-leases a 177-seat Boeing 737 from Futura International Airways for the peak periods and plans to use the aircraft to test a twice-weekly service to Portuguese cities Lisbon and Oporto. Depending on the success of these flights, the carrier will consider acquiring three to four mainline jet aircraft, which would bring additional European cities, as well as destinations in Gambia, Mauritania and Senegal, within reach.
For this to happen, Blass says its profit environment must improve. Today, inter-island fares are capped by the Spanish government. Binter successfully applied for a 3-4% hike in the highest fare, but says this does not cover the increase in its fuel bill. Meanwhile, Binter is facing competition in its home market, with the 2003 entrance of fellow ATR 72 operator Islas Airways. Blass estimates that Islas, which operates two aircraft, has captured 10% of the market.
Although Blass says Binter has not lost passengers, he says that the competition has affected fares and "margins are falling". To combat this, the carrier hopes the government will mandate some liberalisation of the fare environment, perhaps allowing peak-period pricing. He also is focusing on payroll costs.
The carrier inherited Iberia pay rates with the purchase and agreed to maintain salary status quo until 2007, but says that growth will hinge on downward movement. Blass calls labour's reaction to cost discussions "enthusiastic". He says the carrier's 450 employees "are realistic. They know that if we want to grow, our cost benchmark cannot be Iberia. It has to be the low-cost airlines."
RICHARD PINKHAM / TOULOUSE
Source: Flight International
