Despite facing new challenges such as rising fuel prices, inflation, devaluation of regional currencies, regulations in some countries, tax rates, and other factors, the CEOs of Avianca, Copa Airlines, Aerolíneas Argentinas, and Aeroméxico agree that the airline industry is key to the economic recovery and the promotion of tourism in their countries, so they are betting on continued growth.
At The CEOs' Journey panel held at the ALTA AGM & Airline Leaders Forum organized by the Latin American and Caribbean Air Transport Association (ALTA) in Buenos Aires, the CEO of Aerolíneas Argentina, Pablo Ceriani, described how after the pandemic the airline's demand and operations grew to levels of between 70% and 80%. "We are with a recovery that surprised us because of how solid it is. We were closed the first year of the pandemic, and it took us longer to recover," he admitted.
For Adrian Neuhauser, CEO of Avianca, amid the pandemic, they had to make one of the most decisive decisions of this airline, to enter Chapter 11 of the U.S. Bankruptcy Law, from which they emerged with a well-defined restructuring plan and with which they seek to put the airline back on track with a new vision. "It was essential to do so; going through Chapter 11 was a matter of life and death. We knew how important Avianca is for the economy, for society, and how important it is for the company to exist. It is essential within the ecosystem for employees and us.
Aeromexico went through the U.S. Chapter 11 process, and its CEO Andres Conesa says that at that time, amid the pandemic, there were not many options. "It is the most important restructuring in the history of Mexico and leaves us with many important lessons. We came out stronger; in the end, the most important lesson is that crises are opportunities; you will never be able to change your way when everything is going well," said Conesa, pointing out that efforts were doubled and tripled.
Conesa emphasized that today Aeromexico is stronger than before, and they are looking to grow even more to connect Mexico with the rest of the world.
He added that they expect to retake the Asian market as soon as these markets are opened. "The connection for Mexico and the rest of Central and South America with Asia is key."
Pedro Heilbron, CEO of Copa Airlines, pointed out that after the pandemic, they were surprised by the rapid recovery of tourism and leisure travel, while business travel is still lagging and has not returned to the passenger traffic that used to move this segment of corporate travelers before the pandemic.
Heilbron said that the growth of competition in the region with new airlines entering the Caribbean and Central American market and the consolidation of others makes airlines like Copa Airlines want to continue improving their air service proposal. "We have to be better, more competitive, and more efficient in what we do, and that is the formula," he replied about the arrival of new players in the airline industry.
Operational and external challenges
Avianca, Aerolíneas Argentinas, Aeroméxico, and Copa Airlines's CEOS described some of the challenges they face operationally and externally.
Pablo Ceriani, CEO of Aerolineas Argentinas, said there is some uncertainty as to whether the growing pace of passenger flow will continue. At the same time, an overheating global economy is affected by high prices and inflation, which can affect household income. "As much as we say that we try to do everything flexibly, this is quite a complicated business because the investment plans are long term and we have many sunk costs, and we do not have much maneuvering capacity, but we have to continue investing," he stated.
Andres Conesa, CEO of Aeromexico, said that there are regulatory challenges in addition to the global economic context. "We have to ensure a permanent level playing field that allows for more significant development, job creation, and benefits for the country. The key is to achieve greater regulatory clarity, which the government and the industry must do.
Adrian Neuhauser, CEO of Avianca, said it is essential to achieve a sustainable recovery of the regional airline industry that generates jobs and business opportunities with connectivity between countries and continents. "Aviation is fundamental for Latin America because it allows us all to connect, to do business and, of course, to generate economic growth and will allow us to have a better quality of life," said Neuhauser.
Pedro Heilbron, CEO of Copa Airlines, stressed that it is vital to promote the competitiveness of the airline industry to continue boosting the regional economy with more connectivity and promoting tourism. "Aviation has an important impact on the economy and tourism, but at the same time, new charges, costs, and taxes are imposed that go against this, so it is necessary to seek to promote the industry's competitiveness," he said.
The CEOs agreed that this industry has shown remarkable resilience and will continue to be resilient as long as it also strives to focus on decarbonization, including innovations to improve customer care and service, while reinventing itself every day amid fierce competition and a consumer who continues to seek revenge for the almost two years without travel.
