MIAMI— Juan Emilio Posada is one of the founders and current chief executive of Colombian carrier Viva Colombia. The airline was created in May 2007 and Colombia’s civil aeronautics agency granted its approval for the creation of Viva Colombia on August 5, 2010.
Posada has served as the CEO of Avianca and Aces Airlines, and was chairman of the Latin American & Caribbean Air Transport Association for four years. Before entering the air transport business, he worked as a manager in the nickel and precious metals division at Billiton Marketing & Trading BV, one of the Royal Dutch Shell Group subsidiaries located in Netherlands. In addition, he was the Banco Cafetero’s international vice president.
Posada spoke with AirwaysNews.com about his country’s need for a low-cost carrier, how the market has reacted to Viva Colombia and its move to start service to the United States.
AirwaysNews.com (AWN): Why do you think a low-cost carrier was needed in Colombia?
Juan Emilio Posada (JEP): The Colombian market is the third-largest one in Latin America after Brazil and Mexico, and size does matter with low-cost carriers. The country was ready for a low-cost carrier. Plus the [airline] competition in Colombia wasn’t deep, so the time was ripe to introduce more competition here and in the region.
AWN: What was the initial reaction in your country that you were going to challenge flag carrier (and the second-oldest airline in the world) Avianca, Copa Airlines and LAN Colombia, among others?
JEP: I’ve been in this market and helped run some of those airlines. The typical response is to reduce the fares on those flights that coincide with a newcomer [airline]. They also try and match the number of seats that match the newcomer’s schedules. So if one of them has 10 flights a day in a specific city-pair and we have three to five flights, they will reduce fares that closely match our flights in terms of timing. Their revenue is diluted on those flights where they match ours.
But we cater to consumers who pay for tickets out of their own pockets. They are the ones who are most sensitive to cost. They have been amazing at accepting us as an ultra low-cost carrier. Our fares are low, and you have many choices to add on for your experience, including check-in, fast boarding and baggage. This response has translated in our numbers. We transported 3.2 million passengers this year, and we’ve only been operating for three and a half years.
AWN: Low-cost carriers have not been a big factor in South America. Why do you think that Viva Colombia has been successful?
JEP: It has to do with market sizes. The fact is that the size of the Colombian market, both domestic and regional, is considerable. That has been a big factor that helps with our success. Plus fares were so high before we started, so we were notably discounting [them]. It made a big splash and stimulated growth — up to 300 percent in some destinations. Our competition did lower prices, so the markets grew for everyone, but on average, we get 45 percent of that share — with lower costs.
AWN: Viva Colombia has flights from San Andres to Cali, Cartagena and Medellin. Why were these particular routes so appealing?
JEP: San Andres is a long flight by Colombian standards, at an hour and 45 minutes. It’s a beautiful island that’s an aspirational destination for Colombians. Once we started offering good fares there, people jumped on them. And Colombia has promoted San Andreas overseas, so all of that has made us a major player in San Andres.
AWN: What are your prospects for offering flights to Venezuela?
JEP: We would love to go to Venezuela and could offer fares that are half what they are now. It’s a great opportunity, but we just have to find a way to operate in Venezuela, and we are working on that. Venezuelan are paying so much to get out of the country, so there is an opportunity for us. But it’s not easy to set up a timeline for when we’ll operate there.
AWN: You will start service from Miami to Bogota and Medellin on December 2. Why did you think now was the time to introduce service to the United States?
JEP: It’s a large market that’s very attractive. Miami is one of the main cities that people in Latin America like to visit. And starting the flights right before the Christmas season is a real opportunity for people to get to know our product during a high-demand period. We try to keep our model simple as possible, and we won’t change that for a longer flight. The purpose is to offer the lowest fares for our customers.
AWN: What other cities are being considered?
JEP: Any market that has a logical connection or attraction to Colombia that is around 4.5 hours away. Once the technology becomes more accessible, we can fly aircraft like the Airbus A320neo to cities like Orlando and Washington, D.C. New York City is an attractive market, but we need an aircraft that can get there without sacrificing the seats you can sell. We will eventually have those [longer-range] aircraft. But right now, we’re focusing on low-hanging fruit and we’re happy with that. We want to keep it simple.