Competition among airlines in Colombia is expected to increase in coming years, even as the traffic continues to grow.
Executives from AviancaTaca, Copa Colombia and LAN Colombia agree that competition is increasing in the country's domestic market but are taking different approaches to address the issue.
Estuardo Ortiz, chief operating officer of Bogota-based AviancaTaca, says that the airline is reducing costs in order to maintain yields and market share in Colombia, at the Routes Americas 2013 forum in Cartagena on 10 February.
"The domestic market has a lot of options and a lot of competitiveness along with growth," he says. He cites statistics that passenger traffic has grown nearly 78% to 16.9 million passengers in 2012 since 2008.
Copa Colombia on the other hand is shifting capacity to international flights between Colombia and its hub at Panama City, Panama, from the domestic market. The carrier cut capacity in the country by 24.5% in 2012 compared to a year earlier.
"In a way, we saw that coming and went in a different and more profitable direction," said Peter Heilbron, chief executive of Copa, during an earnings call on 7 February.
Hernan Pasman, chief executive of LATAM-subsidiary LAN Colombia, says that the airline sees opportunity in the market and will continue to grow, at Routes. The carrier increased capacity in Colombia by 18% year-on-year in 2012.
"It's tough for us and it's a challenge," he says. "[But] it's a good challenge. We have to think outside the box."
About half of LAN Colombia's future growth will be domestic and half international, says Pasman. The airline hopes to add flights to the USA and then to Europe during the next two years.
Infrastructure at Bogota's El Dorado International airport is a limiting factor for airline growth in Colombia. Ortiz says that the new terminal that opened in October is good but that it does not match the traffic growth.
"We have infrastructure with a 12 million capacity in 2012, when we have flown almost 20 million passengers," he says, referring to the total design capacity and traffic at El Dorado last year. He also says improvements need to be made in terms of air traffic control and slot management during peak periods.