(Bloomberg) – Ultra-low-cost airline JetSmart Airlines is accelerating plans to expand in South America, as the region’s largest airlines give way after being forced into bankruptcy by the collapse of travel in the face of the covid-19.
Owned by private equity firm Indigo Partners LLC, by magnate Bill Franke, and which also has a majority stake in Frontier Airlines, JetSmart will launch a Peruvian airline early next year and a cargo business in a few months. The airline is also considering a possible move to Brazil and Colombia, depending on how the pandemic affects the industry, said its executive director, Estuardo Ortíz.
“We are planning to accelerate our expansion based on how the market recovers and we are in a good position to do so. Indigo Partners and all of our strategic suppliers continue to support the airline, ”he said in a telephone interview. “This situation is unprecedented. It will change the way competition and the market are structured. ”
The global drop in travel has decimated the airline industry in Latin America, with a 91% drop in traffic in June compared to the previous year, according to the International Air Transport Association, IATA. While other regions have reopened airports and allowed flights to resume, Latin American governments have largely kept borders closed as the virus continues to spread, making the region a global epicenter for covid.
“Latin America will be by far the region that has had the most restrictions and border closings of any other region in the world,” Peter Cerda, IATA regional vice president for America, said at a press conference on Thursday. Globally, the organization does not expect demand to recover to 2019 levels until 2024.
The recession forced two of South America’s largest airlines, Latam Airlines Group SA and Avianca Holdings SA, to seek bankruptcy protection in the US and reduce operations: Latam left Argentina and Avianca Peru.
JetSmart, which operates primarily in Chile and Argentina, is negotiating contracts and adjusting its fleet plan, including the delivery of Airbus aircraft, for the next two years. Ortíz predicts that between 75% and 80% of demand will return by the end of 2021.
The airline will begin operating in Peru in the first half of next year with two or three planes. Before the pandemic, it hoped to start operating in Colombia and Brazil within two to three years. But the airline is positioned to accelerate plans, Ortíz said.
“We adopt a long-term vision of what it would take and the capital it requires,” he said. “The covid-19 could, in the long term, provide an opportunity for JetSmart, as it could open routes and airports.”
Original Note: Air Mogul’s JetSmart Sees Opening in Latin America Amid Distress
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