Monday, March 24, 2014

Alas Uruguay Continues Plans to Start Service with 3 737-300's in 2014

Alas Uruguay is continuing with its plans to start service with three leased 737-300's this year.

Senior officials of the airline being formed by a group of former PLUNA employees met with the Uruguayan senate on 19Mar14 seeking support for the carrier's business plan.  Most of the plan was held in confidence but the Uruguayan newspaper El Observador was able to learn some of the details:    

Keys to the start of service are:

1) Approval of a pending credit from the FONDES (Uruguayan government development fund) of US$ 15 million. 

2) Granting of desirable slots on the highly-profitable Montevideo (MVD) - Buenos Aires Aeroparque (AEP) route.

This last condition is highly doubtful, especially because the airline is seeking two early morning slots, one at mid-day, and two more in the evening, all of which are currently held either by Aerolineas Argentinas or BQB Lineas Aereas. The Argentine government is likely to prioritize the interests of the state-owned Argentine carrier and not cede any slots to Alas Uruguay beyond those currently operated by BQB, which is also a Uruguayan airline.  

BQB Lineas Aereas is part of a larger transportation group that includes the Buquebus ferry lines and controls 75% of the total available space for passengers traveling between Argentina and Uruguay by air or sea.  Alas Uruguay senior officials clearly expect that BQB will give up some of its better slots between MVD-AEP but the latter only operates 2x/daily on the route so it has little, if anything, to give to the newly-forming airline.

Beyond the Montevideo - Buenos Aires "Air Bridge", Alas Uruguay is planning a "hub-and-spoke" system similar to the network that PLUNA had assembled at the time of its demise, using Montevideo (MVD) as a hub connecting to different points in Argentina, Brazil, Chile and Paraguay. The carrier aspires to operate as something of an LCC with lower wages than average for the region and 25% of salaries going towards helping capitalize the airline. 

Alas Uruguay's business plan calls for the airline to carry 560,000 passengers in its first year with a 12% increase to 627,000 in its second year.  Revenue would grow 24% in its second year - faster than the growth in passengers -suggesting a yield increase.  Presumably the carrier would offer many discount airfares in its first year to attract business with fewer discounts in its second year when it is better-known.  

A total of 70 weekly flights would be operated.  The airline forecasts first-year operating losses of US$ 2.84 million but second-year profits of US$ 13.49 million.  Alas Uruguay's management further claims a financial benefit to Uruguay of US$ 79 million per year with US$ 60 million coming from a forecast of 100,000 new tourists annually and the rest coming from savings to the government of the unemployment insurance it is currently paying the employees, new tax collections, and the value of products and services that the carrier would consume.         


No comments:

Post a Comment