We’re Going to Hear a Lot From the New Avianca in the Coming Years

Avianca, TACA

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.

The New Avianca

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.

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16 comments on “We’re Going to Hear a Lot From the New Avianca in the Coming Years

  1. Perhaps worth noting that Copa used to be a subsidiary of CO and still has a livery very similar to CO’s, which explains why it went from SkyTeam to Star Alliance more or less in lockstep with CO.

    1. Actually, UCH is a minority shareholder in COPA, with CO having reduced their stock holdings to >10% after the COPA IPO in the mid 00’s. Obviously the relationship is still very cozy but COPA Holdings, S.A. is a stand alone Company.

      The Kriete family leadership at TACA (we called it Take A Chance Airlines) paved the way for the multi-national airline model, not just in LatAm but globally. Taking a collective of unsustainable Central American flag carriers, operating claptrap 727s and 737s to MIA, MSY and IAH, into a modern regional network with a modern fleet was risky and brilliant. Amalgamating AV into the mix is the next logical step for creating a trans-national,sustainable and reliable network going forward.

      While consolidation in the North American market deeply concerns me….this type of collectivization in the to the south has more upside than down. (Comparing the North American market to central LatAm is like apples and tennis shoes)

  2. CF – have you seen some of the fares, even advance purchase returns, that TACA charge within central America where they have no competition ? It’s sometimes cheaper to fly via Dallas than go direct within C. America.

    While in the US and Europe different airline groups have hubs all over the place, it looks as if in Latin America it will not be the case. Combined with long distances and poor public transport (18 hours on a bus anyone?) and less than brilliant roads, it says to me that airlines will exert their quasi monopoly powers.

    1. David – There’s no question that it can get expensive to fly into Central America, but they aren’t huge markets. And TACA has put together a safe and reliable operation which probably makes it well worth the fares for a lot of people. If markets are big enough, then other airlines will move in to connect with the US as we see in places like San Jose, Costa Rica.

  3. I’m actually surprised the TACA brand went away. TACA like Avianca has been a strong name all over the region, despite some incidents in the past. But anyway glad to see a unified strategy to take on LATAM.

    Copa in my opinion is the real benefit for Star. While being significantly smaller, they have the 6-bank hub structure down and a full relationship with United (one can even earn United EQM on Copa). They’ve advertised well the easiness of the Hub of The Americas, which is something that Bogota, Lima, etc needs to work on.

    I would like to see FRA-PTY to improve the connections, although LH may be content with FRA-BOG. I hope Star works with Avianca constructively instead of simply sapping the benefit for UA and LH.

  4. I wonder how many of the business travelers they can attract. Hubs in Central America and Bogota are too close for flat beds to make much sense so all they really offer is US-domestic-first-stlye seats. Unless they get some long-haul going out of Brazil, anyone who wants to get some sleep will pick One World, or even UA or AC to Lima or points south.

    I’m also sad to see TACA go. The few times I flew them I was impressed with the professionalism of the staff.

    1. DC – Very true. Most of these routes aren’t going to support flat beds (or even anything beyond domestic-style First Class), so if you’re connecting into deep South America, it won’t be competitive for those traveling up front. But flat beds can be very expensive to get down there, so they can still compete on price and carry a fair bit of traffic at a good fare.

  5. Sounds good to me! I flew Avianca from LIM-BOG-SAL and LOVED IT! Beautiful, new planes with video at each seat (and a coat hanger too!). Beat Taca (SAL-LAX and LAX-SAL-LIM) by a mile, with scattered screens around the airplane. Blah.

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