ANALYSIS: VivaColombia rides on home country's growth

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Medellin-based low-cost carrier VivaColombia will launch its first international flights this year, providing the first low-cost competition on major trunk routes long dominated by the region's major full-service airlines.

The airline's move to enter international markets, coming relatively soon after its launch in May 2012, underscores its ambitions and a steadily growing Colombian passenger market that has remained strong even as other major Latin American markets encountered uncertainty in 2013.

VivaColombia confirmed last month it will begin non-stop flights between Medellin and Panama City in the third quarter this year, as well as service between Bogota and Panama City. In the fourth quarter, it will start Bogota-Lima flights.

More crucially, the airline will open a base in Bogota where it will place its two new Airbus A320s. The leased aircraft is in addition to VivaColombia's fleet of five A320s. Besides the new international flights from Bogota, the carrier will also launch six new domestic routes from Bogota.

VivaColombia will be the only low-cost carrier operating on its three new international services. Latin American airline group Avianca and Panama's Copa Airlines now dominate Panama City-Bogota and Panama City-Medellin, while LATAM Airlines Group's LAN Peru subsidiary serves Bogota-Lima in competition with Avianca.

VivaColombia has not revealed how often it plans to operate on these international routes, but it will enter markets heavily served by Latin America's legacy airlines. Bogota-Panama City is served 70 times a week, while Bogota-Lima and Medellin-Panama City are served 42 times weekly each, schedules in Innovata show.

Latest available statistics from Colombia's civil aviation authority Aerocivil show that traffic on all three routes has grown. From January to October 2013, passenger numbers on Medellin-Panama City grew 15.7% year-on-year. Passenger numbers on Bogota-Lima and Bogota-Panama City rose 8.3% and 6.6% respectively over the same timeframe.

Considered Latin America's third largest domestic passenger market after Brazil and Mexico, the Colombian market held up well in 2013 even as overcapacity and slower economic growth concerned Brazil and Mexico's airlines last year. Colombia's air passenger market is expected to have grown at a double digit rate in 2013. Aerocivil statistics show domestic passenger numbers from January to October 2013 grew 15.9% year-on-year, with the country's domestic carriers reporting an average load factor of 78.9% during the period, up from 77.7% in 2012.

Domestic capacity in Colombia, 2012 vs 2013

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Source: Capstats

VivaColombia, despite being less than two years old, has surged ahead to become the country's third biggest airline after Avianca and LAN Colombia with a 9% market share. The low-cost carrier offered 982 million available seat kilometres in 2013, more than six times the capacity it had in 2012, according to Capstats.

The airline's growth has come as Copa Airlines' Colombian subsidiary continues to draw down its presence. Copa Colombia's domestic capacity fell 14.7% year-on-year in 2013, shows Capstats. Copa has said it does not plan to grow its Colombian operations further as it chooses to concentrate on its international operations out of Panama City.

VivaColombia believes that its birth as the country's only low-cost carrier has helped stimulate traffic growth in the market. Its executive chairman Juan Emilio Posada told Flightglobal in November that the domestic market has grown 20% since VivaColombia launched in May 2012. Going by the carrier's 2014 plans, it might not be long before the same effect is extended to the international front.