The Caribbean-Latin America market is tiny but its potential is starting to attract some big name carriers
Gol recently launching low frequency seasonal charters to three Caribbean islands may seem like a relatively minor event. But the arrival of the largest Latin American low-cost carrier in Aruba, Curacao and the Dominican Republic is a big deal for the Caribbean, as it marks an important step in its efforts to boost Latin American links.
Except for some very short flights connecting the southern Caribbean with nearby Colombia, Venezuela, Guyana, French Guiana and Suriname, there are virtually no direct services between the Caribbean and South America. But at the end of June Gol became the first carrier from Brazil, Latin America's largest market, with Caribbean services.
Gol is now operating a weekly flight from Brasilia to Aruba and Curacao on a triangular routing. It is also offering separate once-weekly flights from Sao Paulo to Aruba and Punta Cana in the Dominican Republic via Caracas using its Varig brand.
While all the services started as seasonal charters for package tour companies in Brazil, Gol chief executive Constantino de Oliveira Junior says the carrier is looking at transitioning them to scheduled flights. This will allow Gol to sell seats which are not sold as part of packages through its website and other distribution channels. It may also give Gol enough business to add frequencies and offer the service year-round. "We'll start during the [peak] season and we'll check out the demand," Oliveira says. "We'll test the market and see."
Oliveira is bullish on the Caribbean because it remains an untapped market with significant potential and is within the range of Gol's Boeing 737s. He says Gol, which serves about 50 destinations in Brazil and another 10 in South America, is evaluating several other Caribbean markets.
"St Maarten is a potential market," Oliveira says. "Santo Domingo is another destination we're looking at for sure. They have 9 million people living there. It's a great destination."
UNTAPPED POTENTIAL
Constantino points out that the Dominican capital has a healthy mix of leisure and business traffic which can sustain regular year-round services. Panama's Copa can already attest to the strength of the Santo Domingo market. Copa now offers four daily flights to Santo Domingo from its Panama City hub, where it specialises in offering connections throughout Latin America and, increasingly, the Caribbean.
Copa now serves nine Caribbean destinations, having added Aruba and Trinidad last year. Both new routes are performing well, despite the economic downturn. Copa has already doubled capacity to Port of Spain in Trinidad, adding a fifth and sixth weekly flight and up-gauging most of the frequencies from an Embraer 190 to a Boeing 737.
Copa chief executive Pedro Heilbron says his carrier is evaluating several new Caribbean destinations, eyeing markets like Port of Spain where there is strong demand from the business community for Latin American links. Smaller islands, which rely mainly on North American or European leisure traffic and do not have any Latin American business connections, do not fit with Copa's model." There are certain islands that do attract intra-Latin American traffic. There are opportunities there," says Heilbron. "We'll continue to look at opportunities in the Caribbean."
Rival TACA has noticed Copa's recent success in the Caribbean and is also now looking to build connections in the region. TACA, which is based in Central America and has a subsidiary in Peru, launched a thrice-weekly flight from Lima to Santo Domingo in July. The Dominican capital is the second TACA Peru Caribbean destination after Havana, which was launched in March with three weekly flights. TACA says the two routes are part of a project to strengthen its Lima hub with new Caribbean connections. In Lima, passengers from Cuba and the Dominican Republic are now connecting to several South American cities, including Asuncion, Buenos Aires, La Paz, Montevideo, Rio de Janeiro, Santiago, Santa Cruz and Sao Paulo.
Lan Peru has also unveiled plans to launch twice-weekly flights to Punta Cana in September as part of a similar project to improve connections at its Lima hub. Punta Cana will be Lan Peru's first Caribbean destination although its sister carrier, Lan Argentina, already operates one weekly flight to Punta Cana from Buenos Aires.
Heilbron acknowledges TACA and Lan represent new competition for Copa in the growing Caribbean-South America market but he says "our hub is stronger", pointing out Copa operates nine times more frequencies to Havana and Santo Domingo than TACA and has a much bigger South American network.
Besides Heilbron, who served as president of Latin American and Caribbean airline association ALTA from 2005 to 2008, is a big advocate of more services in the now very limited Caribbean-Latin American market: "It's good for the islands. They need to be more connected to Latin America."
Airports throughout the Caribbean are now actively trying to develop connections to Latin America, including St Maarten, which will host the Airline Business Network Latin America 2009 route planning event in December, and Aruba, which hosted Network Latin America 2008.
Aruba Airport Authority head of airline marketing Peggy Croes says attracting Gol ended a long search for a Brazilian carrier to fill the void left by defunct Brazilian carrier VASP, which operated twice-weekly year-round flights from Sao Paulo to Aruba via Manaus. "There's always been demand for Brazil," Croes says.
She says Varig also had a twice-weekly service from Sao Paulo to Aruba via Caracas, but this was dropped after it was acquired by Gol. Croes says, in addition to launching Brasilia-Aruba in late June, Gol restarted the Sao Paulo-Caracas-Aruba link by extending some of its Varig-branded Sao Paulo-Caracas frequencies to Aruba. The airport now hopes to persuade Gol to extend its Brasilia flight into a scheduled year-round service and launch Sao Paulo non-stop. "Sao Paulo is a very strong market for Aruba. It can definitely support a direct flight," Croes says.
Aruba is also pursuing new links with Argentina, a strong market also previously served by charters. More long-term the island is seeking to develop a connection with Chile. But for now Copa is taking advantage of the lack of direct scheduled services between Aruba and the southern part of South America. Croes says most passengers on the new Copa Aruba flight are heading to or from South America, with Argentina the biggest single market.
LOW-COST HUB
Curacao Airport is also courting several Latin American carriers. It is hoping Gol will become the first pillar in its new strategy to establish a low-cost hub, connecting South America with North America and Europe. Curacao Airport Holding managing director Clift Christiaan says so far Gol has only committed to operating low-frequency charter flights, but it may later offer scheduled services which could be timed to connect with other low-cost carrier flights. He says: "They are very interested in the model."
Christiaan adds the airport is also talking to a European carrier interested in exploring the Curacao low-cost hub model, although it has not yet been able to engage a US carrier. He says Curacao is convinced low-cost connecting flights are the best alternative for really growing the airport because it will develop transit numbers and also boost tourist traffic.
Like Croes, Christiaan believes there is local demand for Latin American services, particularly Brazil. But the new Gol flight can only be booked as a holiday package from Brazilian travel agents. If Gol transitions its service to scheduled, Christiaan says it will be able to sell tickets from Curacao to Brasilia, where Gol has connections throughout Brazil. This should provide the traffic needed to support additional frequencies. He says: "We're talking to them because we know a lot of locals want to go to Brazil."
COMPLEX CONNECTIONS
Currently Caribbean residents heading to Brazil need to fly through one of the five countries on the north tip of South America, where there are limited connections, or on more regular but circuitous routes via Miami or Panama City. While several local carriers from Colombia, Venezuela, Suriname and French Guiana operate flights to the nearby Caribbean, carriers from the rest of South America have traditionally had little to no Caribbean flights.
Caribbean carriers have historically only served the northern tip of South America. Trinidad-based Caribbean Airlines, for example, has been expanding its presence in its three northern South American destinations, but is not looking at opening up deeper Latin American market. "There is more focus on the eastern Caribbean than Latin America," says outgoing chief Philip Saunders.
If Caribbean Airlines does expand in the region, it is likely to add capacity in its existing markets. In April it increased its Port of Spain-Caracas route, launched last year, from seven to 10 times weekly and in December it upped its link with Paramaribo in Suriname from four times weekly to daily. Saunders says the new Caracas route has "been very positive" with "significant potential" for further growth. Paramaribo is also a "robust and growing market" where Caribbean Airlines is thriving by offering connections beyond Port of Spain.
Antigua-based Liat and Guadeloupe-based Air Caraibes also serve South America. But Liat only serves Georgetown in Latin America, while Air Caraibes just servesCayenne in French Guiana with some flights continuing to Belem in the northern Amazon region of Brazil.
By all accounts the Caribbean-Latin America market is miniscule compared with just about every other Americas market, but there is clear potential there. Even JetBlue, a fast-growing player in the US to Caribbean and Latin America markets, is evaluating potential routes from the Caribbean to Latin America. "That's not a crazy question," says JetBlue vice-president network planning Scott Laurence. "That may be on the cards at some point. We look at everything."
Source: Airline Business
