After launching a nationwide service in Colombia last month, JetSmart CEO Estuardo Ortiz is already heading to his next conquest: Argentina, in a bid to take advantage of seismic economic and regulatory shifts.
The country located at the southeastern tip of the South American continent, with a population of 46 million (the third largest in the region), has been an elusive and dangerous target for airlines in recent years. Economic crises followed, causing political instability and social unrest.
But now the tides are turning.
“It’s a new Argentina,” Ortiz told FlightGlobal on the sidelines of an IATA convention in Santiago, Chile, on April 11. “The macroeconomic replacement implemented through the government is yielding results very quickly. Inflation is coming down and the dollar is stabilizing. “
This is good news for the aviation industry, whose prices are calculated in dollars, but whose revenues are generated in the notoriously fragile Argentine pesos.
In addition, Ortiz says regulatory adjustments will make it less difficult for the airline (and others) to launch new routes. The government recently granted permission to JetSmart, backed by Indigo Partners, to fly between the Buenos Aires City Airport, Jorge Newberry International Airport and Montevideo. , Uruguay, which will begin operating twice a day in May. In addition, the ultra-low-cost carrier recently granted two new routes between Argentina and Brazil.
“There are concrete indications that the market is going to open up more. A new aeronautical code is being drafted, to place Argentina in the fashionable world in terms of regulation,” he adds. “It’s a transformation of the aviation style in a sense of the largest countries in the region. “
JetSmart has recently operated 14 domestic routes and 10 foreign routes in Argentina, with 8 of its 36 Airbus A320 Family aircraft registered on its Argentine Air Operator Certificate (AOC). This operation may double in duration faster than in the future.
Another regulatory replacement being discussed is aircraft replacement (aircraft registered in other countries for domestic service) that would allow JetSmart to use its fleet more flexibly across the continent.
JetSmart, launched in 2017 and headquartered in Santiago, Chile, is Latin America’s first ultra-cheap airline. It has followed the simple formula that Indigo has successfully developed with brands such as Frontier Airlines in the U. S. and Canada. This formula calls for strict adherence to the two most important characteristics of a successful cheap airline: maximum power and strict fare control.
It now operates under 4 AOCs across the continent – in Chile, Colombia, Peru and Argentina – allowing it to offer national facilities in many of the region’s most populous countries, with the exception of Brazil. It serves 79 routes, 52 domestic and 27 international, crossing 8 countries on the continent. Across all of its units, the airline has grown and Ortiz expects the airline to grow to 50 aircraft in the next two years.
In 2023, JetSmart carried 8. 5 million passengers, up 20% from 2022, and expects a further 50% expansion this year. By 2028, just over a decade after its launch, JetSmart aims to have carried 100 million passengers.
In recent decades, volatile politics in Argentina have made it difficult for new entrants to rise and thrive alongside state-owned Aerolíneas Argentinas. The last few years have been incredibly complicated and have shown that the country’s expansion is taken for granted.
Low-cost competitor Flybondi introduced operations in 2018, followed shortly after through JetSmart, amid air liberalization in the country under the leadership of then-President Mauricio Macri. This era also saw the launch of Avianca and Norwegian’s Argentine operations. , new ventures aimed at capitalizing on the elimination of domestic minimum tariff regulations in the country. All have introduced normal service on routes that in the past were governed by Aerolíneas Argentinas and its national subsidiary Austral Líneas Aéreas.
To cater to the influx of cheap airlines, the government has opened a secondary airport at El Palomar, on the outskirts of Argentina’s growing capital, to allow cheap airlines to fight.
But Argentina’s liberalized aviation sector struggled to get off the ground while the same old challenges persisted, adding high taxes, currency depreciation and hyperinflation. Even before the pandemic came to an abrupt halt, Avianca Argentina had ceased operations and Norwegian sold its new operations to JetSmart.
Moreover, in late 2019, in a political earthquake, the Argentine electorate overthrew Macri’s conservative, business-friendly government, opting instead for the left-wing protectionist regime of Alberto Fernández and his running mate (and Macri’s Peronist predecessor), Cristina Fernández de Kirchner. The Peronists reversed the Macri government’s reforms in the months that followed, opting instead for Aerolíneas Argentinas and helping it merge with Austral in 2020, in the wake of the Covid-19 crisis.
At the end of 2023, libertarian Javier Millei sprang into action after an unexpected victory over the socialist candidate, promising “shock therapy” to a crisis-ridden economy that had experienced inflation of up to 250%. In his first four months in office, Millei reduced the value of the currency and drastically reduced government spending, as well as subsidies for transportation, fuel, and energy.
For its part, JetSmart continued to register maximum charging points in Argentina, indicating that demand has not decreased, despite economic pressures on the population.
“It’s just a question of how much we can grow,” Ortiz says, adding that the industry deserves to see a clearer path as early as the second half of 2024.
According to IATA statistics, while the U. S. averages 2. 6 trips per user per year, in Argentina that figure is 0. 6, or about a fraction of neighboring Chile’s 1. 2 trips per year. Many airlines are assessing the long-term prospects of a liberalized market.
“In a football analogy, it’s like the 5th minute, and we still have the first half and the moment to play, but it looks encouraging,” he said.
JetSmart’s Colombian operations, which began operating flights in March from a base in Bogota, will expand to 15 routes and seven aircraft in the coming weeks, compared to 8 routes and 4 aircraft.
The successful launch of a new cheap option in South America’s second-most populous country was made imaginable after the demise of two smaller airlines, Viva Air and Ultra Air, last year.
The airline will open a second base in Medellín in June and is targeting two million passengers in its first year of presence in the country. Colombia also has a below-average capita figure of 0. 78, according to IATA statistics, making it another attractive market for the expansion of air advertising.
“Expanding our operations in Colombia is a precedent for this year,” he said.
As reported by Cirium fleets, JetSmart still has 99 aircraft on order from Airbus, 16 of which are XLR models, according to Ortiz. They are expected to join the fleet from 2026. With those long-haul models, the airline can Looking forward to reaching even further north, Estuardo Ortiz is already outlining its strategy.
“The U. S. and South America are an incredibly important market,” Ortiz says. “The U. S. will probably be part of the plan in the future, it’s too big a market to ignore. “
That said, he’s also mindful of not expanding the airline’s features too much as it continues to ramp up its operations. It plays with its partnerships first, which gives JetSmart some wiggle room. Last June, JetSmart and American Airlines introduced a codeshare alliance that has already proven “very effective” for the Chilean airline, and from which it hopes to take further advantages.
This alliance includes American’s minority investment in JetSmart, which has helped the company’s continued progress and expansion in its home region.
Is JetSmart on track to become the largest airline on the continent, surpassing even local giant LATAM Airlines Group?
“I’m not sure we’re going to make it, but I’d like us to be the most appreciated and valuable airline in the region,” he says. “JetSmart has created a significant disruption in the market, which is why today the cheap style is featured by virtually every single airline in Latin America. This is new.
Airbus is confident that the planned increase in the A350 production pace to 12 aircraft per month can be supported both through the supply chain and the aircraft manufacturer’s commercial system. In the past, the manufacturer had set a target of 10 aircraft production per month. month, and had almost reached that point in 2019, when deliveries of the A350 in Array.
Saab’s aerospace business unit delivered functionality in the first quarter, adding the sale of the Gripen C to Hungary and the move of the first Saab-based early caution aircraft 340 to Poland.
Cheap Icelandic airline Play partly attributes its first-quarter losses to media policy over recent volcanic activity, which the airline called “inaccurate. “Play says a loss of $20. 4 million before interest and taxes was “strongly impacted” by this policy, as expected. a negative impact. ” Now the effects are. . .
CFM International’s planned increase in the pace of delivery of Leap engines this year could be revised downward if Boeing fails to fix production problems for the 737 Max, part of the narrowbody propulsion joint venture has warned.
Belgian air navigation service Skeyes unveiled a prototype virtual tower that will serve as a control center for an operational facility in Namur.
UK ministers have officially announced plans to require the use of sustainable aviation fuels next year, requiring 2% of jet fuel to come from sustainable sources.
FlightGlobal is the leading source of news, data, information, wisdom and expertise for the global aviation network. We provide news, data, analysis and consulting to connect the aviation network around the world and help organizations shape their business strategies and identify new opportunities. and make better decisions faster.