Back in 2010, Colombian-based Avianca and Central American-based TACA merged to form a formidable Latin airline, but the brands remained separate, as did those of subsidiaries Ecuador-based Aerogal and Tampa Cargo. Now the decision has been made. All of the brands will consolidate under the Avianca name. If you don’t know Avianca, there’s a good chance you’re going to know the airline soon. This is definitely an airline I’ll be watching as the battle in Latin America heats up.
A Long History for Avianca and Colombia
Avianca is actually one of the oldest airlines in the world still operating. (I believe it’s number two behind KLM.) It can trace its roots all the way back to SCADTA which began flying in Colombia in 1919. The name Avianca was taken in 1940, so the proud airline’s name has long been synonymous with Colombia.
Of course, being tightly associated with Colombia hasn’t always been a good thing, to put it mildly. As Colombia found itself overrun with drug cartels, the country’s reputation suffered. The conflict with the long running anti-government FARC guerilla group wreaked havoc on the country’s stability. Travel to Colombia suffered for years, and Avianca found itself in trouble. In the US, Avianca’s high profile crash in 1990 in New York when the aircraft ran out of fuel didn’t help things either. But the Avianca of today, as well as the Colombia of today, is completely different.
The Colombian government has been able to establish order in the country and the economy has done well over the last decade. Tourism has begun to grow, and even airlines like JetBlue and Spirit have started serving the country. Avianca took a turn through the bankruptcy courts, but it has come out and has grown as well.
The Rise of TACA
Just a bit north in Central America, TACA has a history that’s nearly as long. The oldest of the Grupo TACA airlines is TACA itself, founded in 1931. Over the years, just about every Central American airline (save COPA in Panama) joined up with TACA to operate as one from a passenger perspective under the TACA brand.
When Avianca and TACA decided to merge, it meant that a big airline was being formed with a dominant position in northern Latin America. But in addition to TACA and Avianca, there was Aerogal in Ecuador, Avianca Brasil (a related but separate airline in Brasil), and TACA Peru in, well, Peru. And then there was the cargo arm, Tampa Cargo in Colombia. (The parent also owns a stake in Mexico’s Volaris, but that isn’t seeing anything change.) The airline had to decide whether it wanted a European-style holding company with many brands or if it wanted to standardize under a single banner. It chose the latter route.
One Avianca for Passengers
Starting next year, Avianca will be the brand name for all these airlines. There will be a unified product and it will mean that Avianca will become a beast in northern South America. With LATAM (owner of LAN and TAM) owning the southern half of South America, there will be a war brewing. They already fight in Ecuador, Peru, and Brazil (though LATAM still dominates the latter two). I would expect more skirmishes as these airlines look to grow.
To add fuel to the fire, there is an alliance war brewing as well. Though today Brazilian-based TAM is a member of Star Alliance, that membership was on shaky ground after the airline merged with oneworld anchor LAN to form LATAM. Star Alliance decided to make a move. It not only inducted the new Avianca into the alliance as a member, but it also brought in the one Central American-holdout from the TACA group, Panama’s COPA.
Meanwhile, if TAM moves to oneworld to join LAN as expected (they will be keeping separate brands, European-style), then oneworld will continue to have THE major presence in the southern half of the region. (SkyTeam is trying to pick up scraps with a weak Aerolineas Argentinas and potentially Gol in Brazil, an airline which has cozied up with Delta recently.) It will be very interesting to see what shakes out when the moving pieces settle down.
Growth in the US
In the US, this will greatly expand the reach of the Avianca brand. Today, Avianca only flies to New York, Washington, Orlando, Ft Lauderdale, and Miami. TACA, however, in addition to some overlap, also flies to San Francisco, LA, Chicago, Dallas, and Houston. This means the new Avianca is going to have quite the footprint in the US and it looks to feed its Star Alliance partner United through that airline’s hubs.
With stability and a single brand, I would hope this means we’ll see more growth for the airline in order to improve Latin options. I wonder if we’ll see a Denver flight to Central America. Or maybe we’ll find some new service to Bogota from the existing gateways.
No matter what, Avianca is positioning itself to be a growth engine. It carries the Star Alliance mantle (along with a much smaller COPA) in Latin America. With improved stability in Colombia and continued growth in Latin America in general, I’d imagine we’re going to hear a lot more from these guys in the next few years.