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Aviation History
1988
1988 - 0025.PDF
market. The whole marketing strategy of Viasa has been changed during the last three years. "Until the 1983 devaluation, 70 per cent of revenue originated in Venezuela," explains Lawrence Lizarraga, industry affairs and tariffs manager. "Venezuela was once the fifth most important country of origin for tourism to the USA, and Venezuelans were known as big spenders in Miami. From being an . airline catering mainly for Venezuelans travelling abroad, we have had to change to focus on carrying foreigners to Venezuela. Around 50 per cent of our revenue comes from abroad now, and we regard a 70:30 ratio as our long-term goal." The Venezuelan Bolivar has undergone considerable devaluation since 1983. It has fallen from 4\ to 32 to the dollar in five years. Viasa is protected from exchange losses by the use of a preferential rate granted by the Central Bank. "We can buy dollars for our overseas expenses at a rate of Bsl4-5, but we are also obliged to sell our dollar remittances back to the bank at the same rate," Sarmiento explains. So long as dollar expenses exceed dollar reve nues the mechanism is to the airline's benefit. If the "preferential" rate still FLIGHT INTERNATIONAL, 2/9 January 1988 Luis Ignacio Mendoza, chairman of Viasa, recently stepped down after his year as lata chairman. He is a New York-educated lawyer, a director of several companies, and was brought in by the Government in 1984 to reverse the airline's fortunes. operates when dollar revenues exceed dollar expenses, the airline will in effect find itself paying a form of interest on the benefit. A tropical climate, 2,700km of Caribbean coast, mountains, forests, and very low prices contribute to Venezuela's considerable potential as a tourist desti nation. But the very limited facilities hamper growth. The opportunities are leading to major investments, but lead times are long in building tourist resorts, and aircraft seats need filling now. The geographical location of Caracas, effectively at the crossroads of North American and European routes on the one hand, and the gateway to the whole of South America on the other, suggests the appropriateness of building up sixth- freedom traffic. But the problems in South America are worse than in many areas of the world. "Until last year we were not allowed to advertise in Argentina that we fly beyond Caracas," says Lizarraga. Nevertheless, early morning arrivals from Europe give Viasa the chance to offer rapid connections to several points, including Bogota and Lima. Flights to Lima are often completely sold out. Blocked currency is a significant prob lem in many countries in South America, although Viasa feels the currency squeeze worse in Colombia than in the better- known problem centre of Peru. "In most countries we can use our local revenue to pay for local expenses, but in Colombia we have to pay for fuel in dollars." says Sarmiento. Lizarraga is also concerned about the fares structure for flights from Europe. "We would like to be able to apply lower fares to promote tourism, but it is difficult to get approval from some European coun tries. On a fare-per-mile basis there are cabotage fares to some of the Caribbean dependencies of European countries 30 per cent lower than the international fares applicable to Caracas." Viasa has, however, found creative solu tions for entering new markets. On behalf of Domenicana de Aviacion, which no longer has any long-range aircraft, Viasa operates a year-round weekly charter service from Milan to Santo Domingo, in addition to its scheduled services to Italy. "Only three mid-Atlantic based airlines fly to Europe, whereas eight European carriers come here," says Lizarraga. "Within the region we ought to co-operate more between ourselves. When Europeans started flying to Bangkok for $500 we should have worked together with Peru to develop an alternative product for the north European market." The rapid increase in capacity to the USA has also created a need to re-evaluate marketing strategy in North American. For decades the New York route was the domain of Viasa and Pan American, but now Eastern and Avensa are on the route, and also on the route from Miami. While Viasa holds its own reasonably well on the New York route, the impact of Avensa has been felt quite considerably on the 3hr flight to Miami. Avensa, now privately owned and controlled by Venezuelan businessman Henry Lord Boulton, operates Boeing 727s on domestic and regional routes and to the two dual-designation US gateways. On some other routes Avensa began oper ating when Viasa dropped services, such as to Panama. Aeropostal is a state-owned airline which traces its routes back to the pioneering Cie Generale. The airline is now also operating several international services with DC-9-50s and MD-80s, often alongside Viasa on the same routes. 23
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