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Airline and Airport Spotlight: Avianca and Bogota’s El Dorado International Airport


Avianca

Founded on 05-Dec-1919 and renamed Aerovias Nacionales de Colombia SA (Avianca) in 1940, the carrier is Colombia’s national airline and operates an extensive network of services across North and South America, the Caribbean and Europe from its hub at Bogota El Dorado International Airport.


The carrier also operates from secondary hubs in other Latin American countries including El Salvador and Peru (image: Boeing 787-8 N781AV at Bogota - Reg Natarajan).


Even allowing for the longevity and history, like many airlines, it has seen financially troubled times in recent years. Avianca Holdings has had a tumultuous 2019 that included shareholder upheaval, urgent debt renegotiations and significant changes to its senior management. The company has cut more than 20 unprofitable routes and part of the strategy in 2020 is full leverage of the company’s hub in Bogotá, with a planned 20% increase in international city pairs. The airline has already announced plans to launch service from Bogotá to Asunción and Montevideo, and recently forged new codeshare agreements with GOL and Azul. The airline has been working to shrink its fleet and aimed to phase out its Embraer 190s by the end of 2019, along with its remaining A318s and two A320s.

Avianca's route map (Blue Swan Daily).

Although Avianca’s new senior management has laid out a back to basics plan that includes cutting unprofitable routes, a refocus on its Bogotá hub and the shedding of smaller gauge aircraft, its debt levels remain significant, and balance sheet repair will be an ongoing concern for the future.


“We have much more certainty about the future,” says its CEO Anko van der Werff. “We are looking forward with a lot of optimism and the numbers are much better. We ended 2019 in the best way. The financial situation of the company shifted 180 degrees in comparison to Aug-2019,” he added.


Like other carriers in Colombia it will be concerned how a new departure tax could impact demand. LATAM Airlines Colombia CEO, Santiago Alvarez, has acknowledged while the tax may only currently be small, it could grow into a big problem. He said: “We are waiting for the regulation on that tax… It is reality [the tax] and it is a pity because it means adding another tax, which in this case is small tax but little by little it starts becoming large.”


Taxes are a big problem in Colombia and IATA regional vice president for the Americas Peter Cerda, speaking at a media briefing on the sidelines of the 2019 IATA AGM and World Air Transport summit, highlighted that there is evidence that “taxes are higher than the fares being offered by airlines”. Grupo Viva Air CEO Félix Antelo subsequently commented that “70% of the cost of an airfare in Colombia corresponds to taxes.”


But, aviation can play a vital economic role in Colombia, if it offered a more accommodating environment, says Mr Cerda. “Aviation supports over 600,000 jobs and contributes 2.1% to Colombia’s GDP… Aviation could increase this contribution with a more accommodating environment”.


Colombia logged both solid domestic and solid international passenger growth during the first four months of last year (2019), reflecting the ample opportunities that exist in Latin America’s third largest aviation market as the country’s economy remains fairly stable and despite the recent challenges, Avianca is maintaining its leading share in Colombia’s domestic market. But the airline’s largest rivals are planning growth in Colombia, which is adding pressure as Avianca aims to hit the reset button and execute its strategy to leverage its position as one of Latin America’s largest airline groups.

Avianca's passenger statistics 2011-2019 (CAPA via Blue Swan Daily).

It is a positive start in 2020 after a tumultuous 2019 that included shareholder upheaval and major changes in its senior executive team, including the installation of a new CEO. However, Colombia’s national airline still has a lot of work to do to decrease its leverage and establish a path to sustained profitability.


Bogota El Dorado International Airport

The new terminal can be clearly seen in the centre of the airport (Aeropuerto El Dorado).

El Dorado is the third busiest airport in Latin America in terms of passenger traffic, and the busiest in terms of cargo. Bogota's airport is also by far the busiest and most important in Colombia, accounting for just under half (49%) of the country's air traffic.


El Dorado is a hub for the Colombian flag-carrier Avianca as well as South America's other major airline group, LATAM Colombia. It is owned by the Government of Colombia and operated by Operadora Aeroportuaria Internacional (OPAIN), a consortium composed of Colombian construction and engineering firms and the Swiss company Flughafen Zürich AG. The airport has been named the best airport in South America by World Airport Awards, has received a four-star certification, its staff was rated the best in South America by Skytrax, as well as being rated in the top half of Skytrax's World's Top 100 Airports.


Opened in the 1950s, by the early 2000s the terminal was starting to show its age; it was suffering from long queues, limited space and passenger access, inadequate departure and VIP lounges, and an outdated public address system – all of which were directly impacting the passenger experience.


OPAIN was tasked with constructing a new international terminal and modernising the existing domestic terminal, featuring 16 gates, 144 check-in counters and some 60,000 parking spaces. Traditionally, the technology required for an airport terminal construction project is purchased piecemeal and installed by multiple independent contractors, resulting in silos. OPAIN therefore sought a single, proven partner to bring together all the required technology elements and oversee the airport’s wholesale transformation, working in tandem with the building controls provider.

As OPAIN’s CEO, Álvaro González, explains, “What made this project challenging was that it would need to be completed in stages, with the work carried out amid the airport’s continued daily operations. That would require careful co-ordination of myriad contractors, processes, procedures, timelines and priorities, to minimise disruption to operations and passengers while all the construction, installation and upgrades were being carried out.”


The new terminal's landside sweeping approach road (Aeropuerto El Dorado)


Having previously implemented SITA’s Common Use Terminal Equipment (CUTE) and Common Use Self-Service (CUSS) check-in solutions, OPAIN was already familiar with SITA, its decades of experience in airport terminal construction environments, and its presence in Colombia since 1961. “The solution proposed by SITA was based on an innovative design and a creative approach centered around the passenger experience that would differentiate El Dorado from other airports in the region,” recalls González. SITA was able to proactively identify and address the needs of all key stakeholders for this complex project, and was engaged by OPAIN as the natural choice to partner with in El Dorado’s technological transformation.

As with most modern designs, the terminal provides plenty of natural light, which in turn also provides good views across the ramp (Aeropuerto el Dorado).

Elbson Quadros, SITA Vice President for Latin America, observed, “No other public building has a greater reliance on technology than the modern airport, which introduces considerable complexity. That’s why we developed our Airport Master System Integration (MSI) solution – to help airport operators minimize risk and delays in airport construction and quickly realize their goal to create a fully-functioning airport with the minimum of fuss.”


El Dorado’s Terminal 1 is today one of the most advanced terminals in the region. By the end of 2017, the expanded facility boasted capacity for 40 million passengers, offering over 100 retail spaces, duty free zones and new VIP rooms, and connecting Bogotá with more than 70 domestic and international destinations. Terminal 2 operates 18 flights to domestic destinations, with passengers able to take advantage of over 50 retail spaces. Both terminals provide passengers with the convenience of fast, secure and free connection to unlimited Wi-Fi.


(Aeropuerto El Dorado)


As well as transforming the passenger experience at El Dorado International Airport, OPAIN had set out to increase commercial income, improve operational productivity and improve ROI on its infrastructure investment. “The combination of SITA’s system integration and responsive onsite technical support has delivered consistently excellent system stability, security, reliability and back-up availability,” says Álvaro González.

In 2016 and 2017, El Dorado was named the best airport in South America by the World Airport Awards, qualified as one of the Top 50 airports in the world, and received four-star certification by Skytrax.


Below: bag claim is also light and spacious (Reg Natarajan).

Bogota and other airports are featured in the Airport Days and Nights books from KJM Today, along with Heathrow Airport 70 Years and Counting. Details on the Home Page.




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