Sunday, January 22, 2017

NEW AIRLINE PLANS: Flybondi Announced Plans in late September & at December 27 Route Hearings

Flybondi 737-800, LV-EAM, artist's image.  ( website) 

The proposed new Argentine low-cost carrier (LCC) Flybondi (translates roughly to flybus) was announced on 30Sep16 in an article appearing in Air Transport World.  The airline's CEO is Julian Cook, founder and ex-CEO of Swiss carrier FlyBaboo.  Backers that are putting together seed funding include Ryanair board member and ex-COO Michael Cawley, ex-Air Canada CEO Montie Brewer, and British Airways City Flyer Express founder and ex-chairman Robert Wright, together with a group of Argentine investors, chief of which would be Gaston Parisier, partner at BigBox, a retailer of "unique gift experiences".

Start-Up Plans

The carrier aims to raise US$ 75 million in start-up capital starting service in the third quarter of 2017 with 6 aircraft and 400 employees flying from El Palomar (EPA) near Buenos Aires to a dozen cities while selling tickets only online supplemented by sales of related travel services, including hotel stays, car rentals, vacation packages, etc.      

El Palomar (EPA)

Flybondi's base would be the secondary airport of El Palomar (EPA) on the western outskirts of Buenos Aires.  

The main objective of operating from this facility would be to avoid the monopoly services of ramp handling company Intercargo at Buenos Aires Aeroparque (AEP) with the problem reportedly not being high wages but low-productivity due to slow aircraft turnarounds currently averaging 70 minutes, which, though an improvement over previous longer turnarounds, is still far more than typical LCC turns of 30-40 minutes.  Slower turns usually translate to 1-2 fewer flights per aircraft per day with the corresponding loss in revenue. 

Initial Destinations

The likely initial destinations would be Bariloche BRC), Comodoro Rivadavia (CRD), Cordoba (COR), El Calafate (FTE), Mendoza (MDZ), Neuquen (NQN), Puerto Iguazu (IGR), Resistencia (RES), Rio Gallegos (RGL), Salta (SLA), Tucuman, (TUC), and Ushuaia (USH).  Aircraft to be used would be either the A320 or 737-800 with the latter being pictured on the airline's website (see above).

Future Projections

Five years into its operation, Flybondi anticipates flying 8 million passengers annually on 25 aircraft with 1,500 employees to 40 domestic destinations and 34 regional South American points.      
Route Hearings

As of early December 2016, Flybondi submitted an official request for 35 domestic routes from El Palomar (EPA), 8 from Cordoba (COR), 7 from Rosario (ROS), 3 from Salta (SLA), 3 from Mendoza (MDZ), plus 43 international routes from 7 Argentine airports. 

The ANAC Argentine aviation authority held route hearings on 27Dec16 with five airlines participating; Alas del Sur, Andes Lineas Aereas, American Jet, Avianca Argentina and Flybondi. Most observers found Flybondi's presentation, though voluminous, lacking in substantial new information on its operational plans.   

Low-Cost Carrier Challenges in Argentina

* The biggest problem for possible LCC's is the low productivity of the Argentine airline workforce relative to those in Europe and the United States.  Wages are not the problem so much as work rules resulting in lower efficiency, with slow aircraft turnarounds of more than an hour being a particular problem.  The unions have fervently resisted changes to work rules, maybe because with Argentine wages being generally low to begin with, being pushed to be more productive could be perceived as excessive and unfair.    

* The state-run airlines, Aerolineas Argentinas and Austral, have opposed the rapid entry of LCC's into the Argentine air transportation market, mostly because their employees work under existing labor contracts and work rules. Low-cost carriers entering the market with lower labor costs and more flexible work rules would offer much lower airfares than AR and AU, taking passengers away from them or forcing the state carriers to lower airfares, either of which would result in even heavier financial losses than the latter are already incurring.

* The Argentine government has minimum airfare levels in effect which it has been reluctant to rescind, mostly because of the losses that this would cause at Aerolineas and Austral.

* Argentina has high airport taxes and fees relative to neighboring countries, largely because air travel in Argentina is still seen as a form of transportation for the relatively wealthy with only 1 in 10 Argentines having flown.


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