There has been a lot of change in the Latin American air travel market over the last few years with major shuffling of airlines in Brazil, blockbuster mergers, and shifting alliances. But there’s one airline that’s flown a little under the radar… Panama’s Copa. This airline is one of the most profitable airlines in the world, and it is rapidly growing throughout the Americas.
Copa is based in Panama and uses its Panama City hub as a connecting point between North and South America with skill. Panama has been a key transit point in the world for a century (hello, canal), but its location is equally ideal for air travel and that allows for some surprising frequencies.
This summer, the airline will fly roughly twenty flights every day from Panama to the US and Canada. That’s 5 daily to Miami, 4 daily to Orlando, 3 daily to LA, 2 daily to Washington/Dulles and New York/JFK, and 1 daily to Boston, Chicago, and Vegas. Many of these are new as the airline is in a phase of rapid growth. There’s also four weekly flights to Toronto and 18 weekly to San Juan.
San Juan is just a small piece of its sizeable Caribbean and Central American operation. Every day, Copa’s fleet of 737s and Embraer 190s gather people from throughout the region and bring them to the airline’s hub of the Americas in Panama. Then the airplanes go on to destinations throughout South America. The scope is pretty incredible, as you can see from the map below. The 737s go as far south as Montevideo, Buenos Aires, and Santiago.
Panama’s location in the middle of the two continents makes for a very efficient connecting hub from a timing perspective. It can offer short connections on routes that often fall very close to a direct routing on the map.
The most important part of Panama’s location, however, is where it falls on the 737 range chart. Between North and South America, airlines are often forced to use widebodies with greater range because of the distance between the hubs. Panama, however, is different.
At 2,941nm, Montevideo to Panama City blocks in at over 7 hours and is about the same distance as going from JFK to London. But the 737 can handle it, especially since no lengthy overwater flying is required. To the north, Los Angeles lies 2,616nm away but the 737 works fine there as well.
Of course, this means Copa is fighting for a different kind of customer than other airlines, especially in the pointy end of the airplane. Copa’s first class is a domestic-style offering that is never going to compete with the flat beds going to Sao Paulo from big US destinations. But it doesn’t need to.
For some, the faster connecting option and frequent flights make it worthwhile. And the ability to get between, say, LA and Belo Horizonte with just a single sub-one hour connection in Panama means that it will take hours less than it would to go on other airlines. And the same can be said for connecting within Latin America. Panama City is a rock star of a hub.
While this kind of operation could be successful enough on its own, Copa is a new Star Alliance member and has had a relationship with United (via Continental) for years. In fact, Continental used to own a big chunk of the airline, and that’s why the airplanes look so similar on the outside.
The relationship is so close that Copa actually uses MileagePlus as its frequent flier program. These relationships give Copa the ability to flow even more people through its Panama hub.
This all sounds good, but, well, is the airline making money? Boatloads. Seriously. Last year, Copa made a 17.9 percent operating margin, and that was a DECREASE from prior years. I highly recommend reading CAPA’s recent analysis on the subject.
In short, Copa is kicking butt and taking names. With those kinds of margins, I’d expect to see these growth rates continue for awhile. Next time you see a funny looking United airplane at your airport, look twice. It might be Copa.