Continental Airlines has inked its first alliance agreement in Latin America. But the Houston-based carrier appears to have limited its linkup with Aces Colombia to avoid invalidating its case opposing the alliance between arch rival American Airlines with Colombia's other international carrier, Avianca.
Continental plans to link frequent flyer programmes and coordinate schedules but the only route the US carrier and Medellin-based Aces have agreed to codeshare on is between Bogota and Quito, a fifth freedom sector that Continental flies daily.
Continental has offered no explanation why it will not codeshare with Aces between the US and Colombia or domestically. However, in papers filed with the DOT opposing the proposed American-Avianca alliance, Continental has argued that the US-Colombia bilateral does not authorise codesharing. Continental clearly had those arguments in mind in crafting its own accord. 'Our agreement with Aces does not undercut our objections to the AA-Avianca alliance and we do not intend to withdraw those objections,' says Continental.
It seems natural enough for Continental and Aces to form an alliance; they are the only scheduled passenger carriers aside from American, Avianca and Aerolineas Argentinas flying nonstop between Colombia and the US. But Continental is circumspect about why it entered such a constrained agreement. The carrier declines to comment on the extent it is hedging against the prospect of an AA-Avianca alliance. But, by its own admission, if it is a hedge, it is not much of one. 'Our Aces agreement is so limited in scope that it does not level the playing field at all with the proposed American-Avianca alliance,' says the carrier.
Juan Emilio Posada, Aces president and chief executive, agrees. 'If the Avianca-American deal is approved, we will be at a clear disadvantage. This [Continental alliance] wouldn't be enough to compensate for the loss of competitiveness -- even if Bogota gave Aces all seven of the frequencies now available to the US.' Continental and Aces operate a combined 31 weekly flights between Colombia and the US, compared to the 66 weekly flights operated by American and Avianca between Colombia and Miami.
It is also unclear how an accord with Continental will affect Aces' search for a strategic partner. Aces hired US consultants earlier this year to find an investor who might play a role in the airline and help finance its fleet renewal. Posada says 'the easiest potential investor would be an airline that could help us enlarge the network and give us cheaper access to technology.' Aces says no talks are underway, but that it is soliciting potential buyers inside and outside Colombia to present offers by 24 October. It hopes to sell at least a 30 per cent stake; Colombia's foreign ownership limit is 40 per cent.
David Knibb
Source: Airline Business
