Guy Norris/FLORIDA

Latin American airlines are in "shambles" and face new failures unless excess capacity is cut, further consolidation occurs and joint action is taken to slash costs, say chief executives (CEOs) from the region.

Speaking at the ninth annual international CEO conference in Florida, Grupo TACA chief executive Federico Bloch said stronger revenues per available seat mile (RASM) will be only be achieved by consolidation and warns that "unless that happens our industry will be very sick...Latin American airlines have a massive RASM gap". He said the problem is made "more grave by the fact that the region has a higher cost per seat mile than the world average".

Despite the failure of AeroPeru, Air Panama, Faucett and SAETA, many of the region's carriers are still suffering, including Aerolineas Argentina, Avensa, Ecuatoriana de Aviacion, LAPA, Lloyd Aereo Boliviano and VASP. Citing the current Aerolineas/Austral strike when the rest of Argentina's airlines are still flying at below 100% capacity, Bloch said "maybe there is one complete airline too many. It is not only time for Argentina, but for the whole region."

Echoing this, LanChile CEO Enrique Cueto said Latin carriers must face up to consolidation by agreement or by force. He also repeated an earlier call for the formation of a "common aviation community" policy for Latin America. Cueto added that the region's "dismal security and safety standards" will only be addressed by pan-Latin American government and airline co-operation.

Varig CEO, Ozires Silva said that government control throughout the region must be eased to allow airlines to consummate domestic partnerships. Although the Brazilian Government recently found Varig "not guilty" of anti-trust activity following investigations into a proposed marketing joint venture with TAM, the national carrier appears to have been warned off. Varig has, however, formed a codesharing agreement with Transbrazil on the Rio de Janeiro-Sao Paulo airbridge and other services. "We'd like to do more [with TAM], but we have been stopped by the authorities," said Silva.

Meanwhile a government decision on the proposed consolidation of Colombian carriers ACES, Avianca and its wholly owned subsidiary SAM has been delayed until next month pending the outcome of talks between the two major shareholder groups. ACES CEO Juan Emilio Posada says the decision also hinges on applications to the Colombian civil aviation authority and the government's competition agency. The proposed AVIACES concept would place all three under a single holding company.

Aeropostal Alas de Venezuala, which began twice weekly services between Caracas and Madrid on 1 May, has filed an application with Avensa/Servivensa to the Venezuelan CAA for a joint venture to include airport handling, maintenance, reservations and purchases.

Source: Flight International