This is the first time LanChile and Ladeco have had any real competition,' says Jesus Diez, president of the Turbus company that owns and manages both National and Avant Airlines. Turbus, which moves a million bus passengers a month, bought National in January when it was floundering from losses on its Miami route.
'Turbus had tried for a long time to get into the airline business,' says Diez, a member of the family that has owned and operated Turbus for 50 years. 'Many passengers who used to travel by bus are now flying. The difference between fares is close. We were looking for ways to recapture those travellers.'
Turbus bought Avant in May 1997, five months after its launch. With the purchase of National, Turbus's title of Chile's largest transport company is reinforced by its control of two airlines with a combined fleet as large as Ladeco's.
Diez differs with LanChile over claims to market share. LanChile says that, combined with Ladeco, it still carries 75 per cent of all domestic passengers. Diez says that may be true as an annual average, but that National/Avant have continued their inroads and now control 30 to 35 per cent of the market.
National and Avant will keep their separate identities, Diez says, but will share maintenance and reservations, and may reallocate some of their 12 aircraft. Their combined fleet consists of 10 Boeing 737-200s and two 727-200s. Two 737s have already moved from National to Avant, which is the faster growing of the two. National will become the airline for local economy class passengers and Avant, with fewer seats, new livery, and more inflight service, will be the 'executive class' airline.
'The first part of our plan is to reorganise local routes,' says Diez. That will involve some new routes, more frequencies on current services and night flights for passengers used to travelling at night on buses.
Avant will stick to domestic service while National flies its transborder routes with dual class service. Besides its Miami route, National has scheduled flights to Argentina, Peru, and Paraguay, and charters to Central America and the Caribbean. Under the Fortaleza accord, National may start routes in a year or so to more secondary cities in the Mercosur region. Diez predicts five years from now the percentage of National's passengers flying regional routes within South America will double.
Diez is unsure what to do about the National's Miami route. National started daily Miami flights late last year as settlement of its claim with the anti-monopolies commission about LanChile's US routes. Without long range aircraft, however, National has been obliged to fly to Miami with 727s that make two or three stops. The route is 'not as good as we'd like' admits Diez, who has cut weekly frequencies to three.
National's options are to abandon Miami, keep struggling with a 727, acquire a 767 and fly nonstop, or form an alliance with a US carrier. National had a signed letter of intent with Delta Air Lines, but began talks with Continental after it won the new route to Chile instead of Delta. If LanChile/American gain approval for their accord, 'Continental has no chance in Chile without an alliance,' says Diez.
Source: Airline Business
