Avianca majority shareholder and airline investor German Efromovich has dismissed the rise of low-cost carriers in Latin America, saying he does not believe that discounters will enjoy the same sort of success they saw in Europe.
He points to the lack of feasible alternative airports in major Latin American cities and the high fees and taxes that the region’s airlines already grapple with.
“If they [the LCCs] can fill up the bloody plane, then maybe. If they don’t, they will be losing their butt,” says Efromovich, who believes that low-cost carriers will struggle to make a profit given the high operating costs for Latin America’s airlines. “We are getting charged for even breathing on the plane.”
Avianca has no plans to unbundle its fares, which is what rival LATAM Airlines Group has done for its domestic operations. The Santiago-based airline group has stripped out meals on domestic flights, for example. Panama’s Copa Airlines has gone a step further, by creating a low-cost affiliate, Wingo, to take over most of its Colombia-based operations.
Despite these, Efromovich is still a staunch believer in Avianca’s full-service offering, believing that the airline is “doing well” without having to unbundle fares.
“You can be a higher efficiency airline, while still serving a sandwich that costs you $3 to $4. And if your profit depends on that $3 to $4, you have a problem,” says Efromovich.