Restructuring of airlines, preference for direct flights, modifications in the routes operated and the use of smaller aircraft are some of the changes expected in the regional air market in the context of the new business normality.
Air traffic has virtually disappeared in the last three months, as governments in Central America have decided to close borders and suspend commercial flights to and from the region's airports as a result of the covid-19 outbreak.
Avianca, United Airlines and Copa Airlines, signed a trade agreement that will allow them to agree flight routes in the American continent.
To ensure the commercial agreement reached on November 30th becomes effective, the three airlines plan to apply for regulatory approval and a complementary antitrust immunity (ATI) subsidy in the coming weeks from the U.S. Department of Transportation (DOT) and authorities in 19 Latin American countries.
Terminal 2, whose opening is scheduled for next year, promises to improve conditions at the Panamanian airport, making it competitive with other hubs in Latin America.
The new Terminal 2, which is 92% complete, will have capacity to serve aircraft in 20 contact doors and 8 remote locations, taxiways, parking platform and aircraft circulation, adding up to pavement surface measuring more than 250,000 square meters.
Dismissing the proposals by the Panamanian company Copa and that of Delta, Avianca Holdings has announced it will start the process of finalizing a strategic and commercial alliance with United Airlines.
The Panamanian airline has presented a financial offer in cash and stock to acquire the second largest airline in the region after Latam Airlines.
The New York Times reported that the offer made by Copa Airlines consists of "... a merger that would value Avianca at more than $2 billion, or a 150 percent premium to its share price last week. [November 29]".
In five years the airline market in Central America has transformed from being a market dominated by two major airlines, to one with new entrants, lower prices and greater connectivity.
The arrival of so called "low cost" airlines to the region has resulted in a progressive reduction in the prices of tickets to fly between Central American countries. Between 2011 and 2014 the average cost without taxes for travelling between Costa Rica and El Salvador ranged from between $400 and $500, while in 2015 it costs $391.
Delta Airlines, United Continental and Copa Airlines may have submitted bids to acquire a minority stake in the company, which is said to be looking for an international partner to strengthen its growth.
Bloomberg.com reports that"...Avianca Holdings S.A., based in Bogota, has been hunting for an international partner to help shore up its balance sheet and support growth...Some giants of the industry have been evaluating the idea."
Copa Airlines has announced two weekly flights between Tocumen and the International Airport Capitan FAP Jose A. Quiñones in Chiclayo, Peru, from June 28.
From a statement issued by Copa Airlines:
Lima, March 18, 2016. Copa Airlines {NYSE: CPA} a subsidiary of Copa Holdings, SA, and member of the global airline network Star Alliance, announced its new route between the historic city of Chiclayo and Panama City, from next June 28 2016, with two weekly frequencies. With this destination, the airline will increase the connectivity of northern Peru with the rest of the Americas.
The stock price of Copa Holdings has fallen and at the same time the airline has stopped accepting Argentina's currency for ticket sales.
Restrictions in Argentina for converting local currency to dollars and for sending funds abroad, have now forced American Airlines and Air Canada to take the same measure implemented by Copa.
With the entry of two competitors focusing on the business of low-cost fares, the airline market in Central America is preparing for a potential price war.
Panama has become the starting point for tourists looking to travel to the rest of Central America, where new airlines want to capitalize on a market which so far has been driven Copa Airlines and Avianca.
The arrival of new competitors with frequencies between Colombia and Central America has generated a reduction in rates, favoring customers.
The opening of routes from Medellin and Bogota to Panama, by the airlines AirPanama and VivaColombia with fares "... up to 70% less than those offered by the subsidiary of Copa Holdings" is already generating benefits to travelers.
The convulsions in Venezuela should not be seen as merely a political issue, but also from the point of view of the economic insecurity it creates in the region.
The effects of the crisis in Venezuela are not only reflected in the economy but spread quickly to the rest of the continent, particularly in countries with the most trade and economic ties.
United Airlines, American Airlines and Air Canada have also suspended the sale of tickets for international flights to Venezuela.
The international airlines American Airlines, United Airlines and Copa Airlines have decided to temporarily cancel the sale of air tickets in Venezuela. The measure was taken due to the uncertainty generated over a multi million-dollar debt the government holds with some airlines and the changes that have been made relating to foreign exchange.
El Salvador's Vuelos Económicos Centroamericanos and Costa Rica's Ticos Air and Ticas Airlines are in various stages of preparation and registration to offer flights in the region.
Vuelos Económicos Centroamericanos (CASI) reported that it has leased two Airbus aircraft and will invest nearly $100 million in order to start operations in March 2014. The company is interested in creating a market in the low-cost segment and not competing with airlines such as Avianca and Copa, said Edgar Hasbun, CEO of the company.
The event will be held on the 7th and 8th of November and will feature 20 minute appointments between sellers and buyers.
The activity will take place at the Hotel Intercontinental in Guatemala and is intended to facilitate contacts between national and international participants, promote brands and open new markets.
Another objective of the macro conference is to provide an opportunity to analyze new business niches and boost exports to Central America and Mexico. Among the categories involved are: the agricultural sector (Vegetables, Fruits and differentiated products) and manufacturing (Food and Drink, Plastics, Cosmetics and other goods).