The third-quarter EBITDAR represents a 15.5% year-over-year increase from the $356 million USD reported in Q3 2024. Total operating revenues reached $1,509 million USD, marking a 12.8% increase compared to the $1,338 million USD recorded in the same period of the prior year. Total operating costs increased by 13.3% year-over-year, settling at $1,290 million USD. Net income for the quarter was $101 million USD, an improvement from $72 million USD in Q3 2024.

Operational and Capacity Metrics

Capacity, measured in Available Seat Kilometers (ASKs), reached 18,284 million, denoting a 6.8% increase compared to Q3 2024. This growth was attributed primarily to a 6.2% year-over-year increase in Stage Length. Passenger departures increased 1.0% year-over-year. The company transported 9.7 million passengers, consistent with the volume in the comparable period of 2024. The network encompassed 169 routes serving 83 destinations across 28 countries. Subsequent to the quarter’s close, Avianca introduced three new international routes, which included Belém (Brazil) and Monterrey (Mexico).

Cost performance for the quarter indicated a reduction in overall per-unit costs. Total Passenger CASK (Cost per Available Seat Kilometer) was 5.7 cents, a 1.9% decrease relative to Q3 2024. This decline was largely driven by Passenger Fuel CASK, which decreased 9.9% to 1.7 cents, resulting from lower fuel prices and increased fuel efficiency. Passenger CASK excluding fuel increased 2.1% year-over-year to 3.9 cents.

Balance Sheet and Credit Rating Actions

As of September 30, 2025, Avianca reported liquidity totaling $1,361 million USD, which represented 24.2% of last-twelve-month revenue. This total includes a cash balance of $1,161 million USD and $200 million USD available through an undrawn Revolving Credit Facility. The Net Debt to last-twelve-month EBITDAR ratio improved sequentially to 2.8x from 2.9x reported on June 30, 2025.

Rating agencies Moody’s and Fitch  upgraded Avianca’s credit ratings to B1 and B+ respectively. Both rating actions were assigned a stable outlook.

Business Unit Performance and Network Development

The cargo division, Avianca Cargo, recorded $157 million USD in revenue during Q3 2025, representing a 14.1% year-over-year increase. The operating freighter fleet currently consists of nine Airbus A330s, following the integration of two additional P2F aircraft during the quarter.

The loyalty program, LifeMiles, reported a 72% year-over-year increase in Q3 2025 Third-Party Cash EBITDA, reaching $77 million USD.

In network strategy, AGIL expanded its Business Class service to 54 additional routes from key operational centers including Bogotá (Colombia), Medellín (Colombia), San Salvador (El Salvador), Quito, and Guayaquil (Ecuador). The company’s passenger operating fleet totaled 161 aircraft as of September 2025, including 134 Airbus A320 family aircraft, 15 Boeing 787s, and 12 Airbus A330s.

Avianca is a member of Star Alliance  and is part of the Abra Group. The Abra Group also controls Gol Linhas Aéreas Inteligentes S.A.   and holds a strategic investment in Wamos Air .

Above photo: Avianca A330F cargo jet (photo courtesy Avianca)

As of December 1, Avianca reported that specialized technicians had completed the software update on approximately 90% of the affected aircraft. The remaining planes are currently undergoing modification, a process facilitated by the accelerated import of the necessary software from France by the manufacturer, Airbus. The airline is collaborating with civil aviation authorities and the manufacturer to fully restore operations promptly.

The disruption, which began after Airbus issued an “Alert Operators Transmission” on November 28, required affected aircraft to remain on the ground until modifications were implemented. The issue was discovered after an investigation into an incident involving a JetBlue Airways Corporation (NASDAQ: JBLU) A320 flight on October 30, where the aircraft experienced a sudden dive in altitude while flying from Cancun, Mexico, to Newark, New Jersey. Airbus stated that the software fix was required because intense solar storms, such as solar flares, could corrupt data critical to the fly-by-wire flight controls of the A320 series planes (A319, A320, and A321s).

The mandate from the manufacturer affects a majority of Avianca’s fleet, impacting over 70% of its aircraft when the order was issued. Globally, approximately 6,000 of the best-selling single-aisle planes required the software repair. The European Union Aviation Safety Agency (EASA) issued an airworthiness directive requiring airlines to complete the repairs before returning the planes to passenger service.

Operational Impact and Customer Rerouting

Avianca stated that the required grounding of aircraft has so far impacted 233 flights and affected 35,708 passengers, with 29,881 of those passengers traveling within Colombia.

Due to the rapid pace of the required work, the airline has re-opened sales for flights scheduled to operate from December 5, earlier than the original December 8 cutoff date. Prior to this, Avianca had initially closed sales for travel dates up to, and including, December 8, to prevent further impact and allow the company to reallocate existing passengers onto available flights.

To manage the disruption, Avianca implemented a comprehensive customer support plan, which included:

• Rerouting: Affected customers were protected through immediate re-accommodation on available Avianca flights or on flights operated by other airlines with which the company maintains commercial agreements.
• Refunds and Rebooking: Passengers whose plans could not be accommodated were offered a refund for unused flight segments. The airline also offered passengers the option to reschedule their flights up to 180 days after the original flight date without incurring a penalty or fare difference.
• Support Services: The airline increased staff presence at airports, with over 50 additional personnel deployed at Bogotá’s El Dorado international airport, to provide assistance, particularly for elderly passengers, those traveling with children, or those with disabilities.
• Capacity Expansion: The contact center and refund processing teams increased capacity to manage the higher volume of inquiries and expedite reimbursements. New communication channels, including WhatsApp, were established to inform clients of irregularities and offer travel alternatives.

Avianca noted that the efforts of its staff, particularly its base of over 2,500 technicians, remain focused on fully restoring the operation. For most aircraft, the required modification involves a simple reversion to previous software, a process Airbus estimated could be completed in approximately two hours for the majority of the global fleet. However, around 900 older A320 aircraft globally require a more complex fix involving the manual installation of new hardware.

Finance Colombia’s executive editor, Loren Moss, sat down for coffee with Rupert Stebbings, the CEO of Alma Air. Stebbings, a longtime contributor to Finance Colombia, brings a wealth of experience to this new venture, including a history in international investment dating back to his time with the Bolsa de Valores de Colombia (BVC) and his role as a former board member of Viva Air.

The discussion focused on this significant milestone from Colombia’s civil aviation authority, Aerocivil, the unique operational challenges of floatplanes in Colombia, and the immense market opportunity for connecting remote and developing tourist destinations.

Finance Colombia: I’m here with Rupert Stebbings, the CEO of Alma Air, a friend, a longtime contributor to Finance Colombia, former board member of Viva Air. You know, I know that you have a long history not only working with investment, international investment, going back to the BVC and before that; but then, of course, your experience with Viva Air. And now you’re heading up this venture Alma Air. And we’ve talked about that before, but you guys have just received your operating certificate from Aerocivil, I believe. Tell me about the significance of this development and give us an update as to where things stand since we last spoke, I think back in February.

Rupert Stebbings: Yeah, sure. Good to be with you, man. We’ve been together a long time, so if you know me a long time, you know my history here. So as opposed to the operating certificate, what do you have? In Aerocivil, there’s various stages, right? And the first stage is kind of a greenlight process. You have a public audience and then they look at the plan, what you’re looking to do, they look at where you want to go, and then they give you the green light, which we’ve got a couple of weeks ago. They say, “Okay, move ahead. Sit down with us, let’s go through everything in detail.”

It’s probably the most complicated stage, stage one. It takes a lot of study and it’s a new product. It’s innovative. So there’s an education process. We’ve now got that green light. So what’s happening? This coming week my team, the pilots, the maintenance guys, the guys who really know how a plane works; they’ll be in Bogotá. They’ll be sitting down with the inspectors looking to get the inspectors appointed in Medellín, Cartagena, to move forward the process. And from there, you’re moving through the stages, it’s a four-stage process, bit by bit by bit. And then by early next year, the planes will be here. Then we check the manuals and all the technical aspects that go with that to make sure it’s absolutely safe and secure.

Finance Colombia: Now, you guys are using Textron (NYSE: TXT) Cessnas for this. What are the specific challenges that come with a floatplane operation? Because not only can these planes land at regular airports, they can also land—and I think that this is what makes your business model unique here in Colombia—they can land in rivers. They can land in keys and small islands, and they can land in areas that are less developed. So what are the technical challenges, and even not just technical, but operational challenges that that brings, along with the advantages of not being tied to, “Hey, there’s no airport here, but we can still service here,” you know?

Rupert Stebbings: No, no. Obviously, there’s a lot of Cessna Grand Caravans already in Colombia doing land to land. They’re a very common plane not just here, but in the whole world. What are the challenges? Well, the challenge is it’s a completely new product. It might exist in the Bahamas, Alaska, Vancouver, Australia, wherever you want to go. Whilst they were here 100 years ago, they haven’t been here for a long time. So what do you have to do? Like you mentioned, they can land on the sea. They can land on the sea, the lakes, on rivers. But it has to be done safely.

These airlines, these planes… seaplanes have got a tremendous track record in terms of security. We want to maintain that. So we have to sit down with the local authorities. There was a test flight carried out by another party down in Ayapel a few weeks ago. And it’s precisely for that. Aerocivil was there, they were on the plane. What are you checking? You’re checking where you’re landing. Is it safe to land? Are there people in the water? Are there boats? Are there jet skis? How is the mooring? How is the pier? Is it safe? Is it big enough? Is it away from boats? So a lot of it’s to do with security.

We know that these planes are environmentally very clean, so we don’t worry about that. But we do worry. And obviously, as an innovative new product and being pioneers in this, we need to make sure we get it absolutely spot on. And that wherever we land, wherever it is in Colombia, it’s done safely, securely, and that everyone locally knows exactly what’s going on and the benefits that come with it.

Finance Colombia: What have you seen with regards to the reception? The last time that we spoke on this, it was at ANATO back in February in Bogotá, and that’s the tourism industry convention. What has been the reaction of hotels, of tour operators, of the agencies, of the package promoters and the industry in general, when it comes to this kind of, innovative for Colombia, mode of transportation?

Rupert Stebbings: Yeah, pre the 2024 public audience, I spent a lot of time on the coast: Cartagena, Barranquilla, Santa Marta, all around the coast, Mompox, Magangué. And the reception was incredible. Public sector, we sat down with the mayor’s office, tourism, secretaries. But then we sat down with the private sector, hotels, agencies. Everyone wants in, everyone wants a new product. Why? Everyone knows that Colombian tourism is booming, but now everyone’s looking at different types of tourism, a ‘better tourist’, for want of a better phrase.

We’ve seen the cruises, AmaWaterways in the Magdalena River, starting in April, 48 cruises a year. And now are going to double that this month. They’re getting a second boat because the top-end tourists, there’s so much demand to come to Colombia. We want to be part of that. And that’s why it’s been well-received. Now, since the public audience, what’s happened is we’ve been called from all over the country. We’ve had Los Llanos, I’ve been down to the Amazon, Bahia Solano. Can we go there? Here in Medellín, Guatapé, which isn’t far from here. I’ve been and sat down with Guatapé, I’ve sat down with the mayor’s office, I’ve sat down with the city, with the town council. And they, too, want to push ahead because the connectivity from Bogotá to Guatapé can be an hour. It’s about four hours now if you want to go El Dorado to Rio Negro. Or Medellín, downtown Medellín, to get there to Guatapé. There were 3.7 million tourists in Guatapé last year. It’s a huge number. When you look at Mompox, which is 84,000, there’s massive numbers, more and more foreigners want to go there, and tourists. But right now, on a ‘puente’, a long weekend, it’s three or four hours. In a nice car, but it’s three or four hours. We can get you there in 10 minutes from downtown Medellín. So the minute we went public with this, everyone’s called us and the reception has been, I can just say, unanimously positive.

Finance Colombia: That’s impressive, especially when you think about- I mean, Guatapé, for example, from here, it would be an hour drive, but it’s more like a two-hour drive because of traffic. And this is a way to avoid that by operating these Cessnas. You can operate out of Olaya Herrera instead of having to come out of here. I think about places that are under development, like Coveñas, for example. They’re expanding Tolú, but up until now, you have not been able to get in there with a traditional 737 or A320 or something like that. The other islands and the islands that are outside of Cartagena that have been becoming more and more of a tourist draw.

Tell me financially, if we talk about from the investment perspective, you know, you guys are stable, you guys have experienced investors, but I believe that there is still opportunity. Tell me about what your goals are. Obviously, operationally, you need to go through the steps to become an operating functional airline. You’re backed by experienced investors that have not failed globally but have a track record of success around the globe when it comes to airlines. This is kind of a new and viable, but very fun project, I think. But tell me about the opportunity and the gap and the need there for additional partners when it comes to looking at bringing this project to fruition and supporting it in the future.

Rupert Stebbings: Yeah, I think over the next six months, there’s three phases. One, as you mentioned, the technical aspects of Aerocivil, which is so important. Number two, commercially, continue to build contacts, look at new locations, destinations. But number three is this: as you know, our backers have been all over the world, many places. But what we’d never pretend to be… I’ve been here 20 years, but I wouldn’t pretend to know Colombia inside out. Every time I go to the coast, or I go somewhere, somebody’s got a new idea. “Have you been to this place, or this lake’s got a beautiful eco-hotel.” We can’t get there.

So every time they tell me to go somewhere, there is new know-how, and our preference would be to have a partner, for sure. We’ve got a lot of friends we’re working with overseas who are already in the seaplane business all over the world. We speak to people in every continent on this. But also locally, Colombia is a country apart. It’s a country with a huge, huge opportunity. It’s a big country. And honestly, it would be great to have somebody alongside us, sat down with us saying, “Hey, have you thought about this? Have you done this?” As I say, we don’t pretend to know Colombia inside out. It’s an amazing country. Everyone knows that every time you see an article anywhere around the world, Colombia gets a mention. The best for this, the best for this. Pension, live, digital nomads, but also for tourism. The numbers are going through the roof.

And I think everyone, whether it’s us, an agency, a hotel, everyone’s looking for more and more know-how, more knowledge. And the more people you have inside the tent, the more people you have helping you, the easier it is to move forward, to make good decisions, and make the most of the opportunities that definitely are here. And so, you know, we’re looking for a partner, whether it’s overseas, that’s fine, whether it’s local, great as well. But we’re definitely looking for people to come on board and join us in this project, which is, as we know, it’s innovative, it’s new, it’s tremendous excitement. And if somebody wants to share in that, you know, we’re open to a conversation.

Finance Colombia: You know, I think the great thing is that intellectual humility, of not coming into a place and saying “we know everything.” And if I think about the track record of some of the investments, the investors, they go into Mexico, they partner with a local company that made things a success. They go into places like Singapore. They go into places like the U.S., and they’ve done that. And even before with Viva, every place that they’ve done that has been a success, because they’ve bought in the local intellectual capital, as well as financial capital participating, so that the local economy has a stake in things. It’s not like, “Hey, we’re from the outside and we’re just going to do things.” In other sectors, in mining, I’ve seen the companies that do it right, they follow that model. They bring in people, not like the old model that we saw in Asia, where it’s like, you’ve got to bring in a local partner so that they can screw you. Like we would see, you know, 40 years ago in India, or in a lot of places like, you’ve got to have a local partner for capital controls and things like that.

No. Colombia, as you know living here, one of the great things about Colombia is that legally we’re treated on an even par as… you know, there’s no difference. And I can speak to this having been a business owner in Colombia, you’re not treated any differently. You have no disadvantage in the local system being a foreigner. And I think that that makes it, whatever the flaws are and whatever the drawbacks are, that makes it a very safe place and an advantageous place for investment.

Rupert Stebbings: Yeah, I worked in the financial sector for decades in Asia. In Asia, it was exactly that model. We’ll parachute in and it’s us. We’ll only use the local because we need their license. So they didn’t take on as much local know-how intellect as they did. Well, that’s changed over the years. And in this sector in particular, if you look at the tourism sector here, there’s tremendous influence amongst the hotels, the agencies, from overseas. But they are all using local know-how, the people on the ground in general or locals, and we want to be part of that. As you say, I wouldn’t be absolutely stupid to come into a country with a new product, a product that was here from 1919. I turn up in 2025 saying I know all about that. No, there’s people who know, there’s people have been around. This airline sector is one of the oldest in the world. So local knowledge, I think, is fundamental.

Finance Colombia: And even in 1919, the industry was started by Germans who came in here and did it and they were able to be successful. And then the airline evolved and went through iterations and became kind of the national flag carrier of Colombia. But I think that it speaks to the friendliness that Colombia has towards investment. And the thing that you mentioned is that these people are real partners. They’re not agents that, “Oh, I need to have a license, or I need to sign off this checkbox on some kind of license form.” But these are real partners who are involved and things like that.

Rupert Stebbings: Absolutely. I couldn’t agree more. And you know, I’ve done a lot of research and written on Colombia, but even agent people at the World Bank, they’ll put Colombia in the top 15 countries in the world to invest for the protection of your rights when you come here, because you’re looked after when you come here, because the country wants to develop, wants to move forward, and they look after you when you get here. And I think that’s fundamental.

Finance Colombia: Absolutely. I mean, you know, I’ve been here for 11 years. I’ve never seen a form or any kind of government document that differentiates between, “Okay, check this box” or “you can’t do this because you’re a foreigner.” And Colombia is great when it comes to that. Now, let’s look at- going back to operations. What has to happen before Alma Air is flying routes, scheduled routes with passengers? Now, I know that in the U.S., you know, we had like Part 91 aviation, 132 aviation and things like that. And there’s one thing that’s a scheduled airline, there’s another thing that’s like a charter airline, and then there’s, you know, general aviation. Is the set up the same way here? And whatever the case might be, what has to happen and how far away are we from booking tickets to fly on Alma Air?

Rupert Stebbings: Okay. So, we’re going to work as an air taxi, charter, no scheduled flights. Which is similar to other countries. Most companies and seaplanes work on that basis. You call me, you tell me what you want. Obviously, we’ll have a menu: this is what you can do, call me when you want to do it, who you want to do it with, etc. So that’s how it’ll work. 100% charter air taxi, as it’s mentioned here. What do we have to do? As I mentioned, the guys are in Bogotá this coming week. They’ve got to sit down, and the aforementioned paperwork, which is the same for everybody, we need to fill in a lot of paperwork. We need to go through the manuals, which are done, but there’s something like 50+ manuals for seaplane operation. So they need to be doing a page turning, go through it. Because it’s new, right?

And also, there’s regulation. We’re also working with DIMAR, which is the coastal authority, and the internal authorities, and the environmental authorities to make sure that everyone’s on board the regulation, everyone understands the rules. So I’m going to put a plane there. What needs to be there? Who needs to be aware of it, etc.? So there’s an awful lot to be done through Aerocivil, DIMAR, and the authorities. In parallel, we’re speaking with the lessors overseas to sort out the planes, the arrival times, and then that will be going through the Christmas period into January. And then by the end of the first quarter next year, we should be seeing planes arrive here to then go through the same paperwork. You can’t just bring it here and fly it around. [Laughs.] ‘Hey, I’m here, I’m just going to fly around.’ No, not at all. We’ll bring it here, the plane has to be checked over, everyone needs to be on board. Then hopefully within around probably less than six months, you’ll be able to call me up and say, “Hey, I want to take the family and do this and this,” you know, whether it’s to go to a hotel, you want to do a sightseeing trip, you want to go to a couple of lakes in a day, you let me know and we’ll get in touch and we’ll sort you out.

Finance Colombia: Amazing. You know, I’m looking forward to it. I’m not the high roller who’s going to be like, “I want to go to a couple of lakes.” But hopefully there will be some kind of group travel opportunity and things like that over the weekend.

Rupert Stebbings: But the thing is, everyone talks about… Every time I do an interview with the press it’s, “How much, how much you’re going to cost?” “Yeah, it’s going to be really expensive.” No. Colombia is full of charter planes already. It’s already full of private planes. And I would say the price point of this is the same as you doing something special for your anniversary. You know, you want to do something special, let’s fly somewhere and go to a spa for a couple of days in a hotel, for example. We’re in that price point. We’re not in a ridiculous point. And the one thing you’ll be buying from me is time.

And that’s the key. If you’re in Bogotá, you want to go to Guatapé for a beautiful weekend and a beautiful hotel, then you don’t need to spend five hours getting there, five hours getting back. I’ll get there in one hour. So you can buy four hours for you, or three hours on the way, three hours on the way back. That’s six hours. Plus, your partner, that’s 12 hours. You get more time at your resort and not at a huge increment in price.

Finance Colombia: And, you know, the Grand Caravans have a capacity of what, like 12 or something like that?

Rupert Stebbings: It’s eight passengers plus pilot and copilot. That’s one thing we push very hard for. You’ve got to have a copilot and pilot. That’s not global, but that’s what we believe, definitely, in terms of security. Then you got the eight passengers. These planes will take up to 14 seats, but we’ve checked around the world and the most successful seaplane companies are using the eight planes. Why? Because if I’m going somewhere in a seaplane, I want to go somewhere real nice and spend a few days, I don’t want to go there with a backpack. Comfort and what I take with me.

Finance Colombia: You know, that’s a good point. My cousin, for example, runs a charter service out of Miami and he services the Caribbean. He has a Learjet and a King Air. And I remember talking to some of his passengers one time in the Bahamas and talking to him; and it’s not that the people are rich. I mean, they’re not poor, but they’re not like super rich where they’re going to fly to St. Bart’s on a private jet. But what happens is, one of the passengers explained to me, they’re mostly like avid fishermen, anglers. And they’ve got to carry all their rods and all that stuff like that. And they explain this, “Look, this is a family trip for us, and there are six of us. And by the time I pay for six airline tickets, it’s actually less expensive to fly on this charter.”

Rupert Stebbings: And the bags, and the extra bag, and the extra length luggage. When people say, “It’s going to cost me this.” I’m like, “No, it’s actually going to cost you this, because you were going to pay this. But I’m going to charge you on top for the convenience.” So it’s not an extraordinarily expensive thing to do. But that’s education, that’s the education process. And the fact that it’s so common; if you go to Vancouver, people commute to work on a seaplane. So it simply doesn’t add up that it costs you thousands of dollars just to go one way. Of course it doesn’t. But again, this is part of the education. I think in time people will come to see “this is something I can do with my family.” And hopefully we’ll fill the skies here with seaplanes, which should be great.

Finance Colombia: I would imagine that there’s also a market for things like air ambulance. Colombia has so many remote areas, there are cities in Colombia that you can only get to by river or by air. And, you know, we just published an article about the high quality of Colombian health care in places like Cali and Medellín and Bogotá. But to get people who need, you know, urgent or unusual operations or have conditions and things like that. You guys can play a vital link in that process as well.

Rupert Stebbings: Of course. It would be a second stage. But already the authorities have manifested interest in what can be done. We looked at a study in 2021, there were thousands upon thousands of air ambulance trips in one year in Colombia, from remote areas in. And they’re not using air ambulances; they’re just putting them into normal charter planes in an emergency. So that’s definitely something we looked at. The authorities are interested; the security forces are interested. You know, as you say, most bad things in Colombia take place in remote areas. Whether it’s military, whether it’s a car crash, whether it’s a heart attack on a remote island. But as we know, as you mentioned, Colombia’s got a tremendous medical system, but it’s concentrated in the main cities or even the big towns. So if you’re in a place, you don’t have to be far away to be hours and hours away. You know, if you go from Colombia to Mompox, to pick an example, you’re talking five or six hours in a car, no mainstream hospital. There’s a hospital in Magangué. But I’ve spoken to many people in Cartagena in clinics who do evacuations, and they say, “No, almost all the cases come into Cartagena or Barranquilla.” So if we can help in any way, we’re definitely there to do that.

Finance Colombia: That’s amazing. Now, is your website up and running? If interested, if people want to get in touch with you all, do they go through your website or what are the methods that you recommend?

Rupert Stebbings: Yeah, flyalma.com, up and running already. It already gives you a good indication of services, destinations, the routes we’re going to use… It’s got the history as well of seaplanes, which is very important to get into, who we are… So then go in there, look at all the information, the contact information is there, we are on LinkedIn or on Instagram. So you can find us, that’s not a problem at all. So you get in touch with us and we will definitely be there to respond ASAP.

Finance Colombia: Is there anything that you wanted to mention that I neglected to ask?

Rupert Stebbings: No, I just think that a lot of people I think have been wondering why it’s taken so long, or longer than expected. But I think you have to be respectful with the authorities. This is something new. And every time you get a new product, they’re very careful about bringing something new to Colombia. People don’t understand. When they did the seaplane test in Ayapel, the members of Aerocivil had never been on a seaplane. So the people at the very top running the airline services, they don’t know what a seaplane is, other people don’t. So it’s very important. And we’re going to isolated places, where they’re not used to these kinds of services. They’re not even used to seeing airplanes, etcetera, or even many tourists. So there’s a big education process. We’re working, obviously, with the Ministry of Commerce and Tourism, FONTUR. So we’ve got a lot of partners. It’s taken longer than desired by anybody, but we’re getting there. And now I feel there’s been a definitely a pivot of the last few months in terms of, “let’s get this done and let’s get this done as soon as possible.”

Finance Colombia: Great. And one of the things that I think I’ve seen, no matter what administration, you know, I’ve been here 11 years, I think you’ve been here longer, is that there is—and this is not a right or left thing—but there is a consensus that tourism and especially things like nature tourism and sustainable tourism are a strategic path to not only pacifying the country… and we talk about terms of peace. We talk about terms of sustainability, not places that are over-touristed, but to really develop and to bring tourism to these, maybe up until now off-the-path areas that you guys will specialize in. So I think that there is a comfort, I should say, in that no matter what happens politically, that remains a priority no matter who is controlling the reins of government.

Rupert Stebbings: No question at all. And in the webpage, we even refer to that. And we also refer back to one year ago, COP16 in Cali, where USAID, which unfortunately is no longer with us, but they mentioned “Colombiamorfosis,” which is this program of getting tourists in new areas. And we’ve been to visit new areas. In Ayapel, we met with the governor of the Zenú people in Cecilia, which is the town they have there. And we’re looking to connect these new areas, and we’re getting approached all the time. Communities are saying, “Look, we’ve got amazing wildlife, birdlife, we’ve got walks you can do in the jungle. We can take boats across lakes.”

And so what we want to do is connect them, because according to the UN, and the Petro government has backed up on this, the fastest return on investment to get people out of poverty is through tourism. It’s a UN program. The UN tourism director is actually Colombian, Natalia (Bayona), who lives in Madrid. So we’ve been in touch with her. And again, we’ve seen tourism booming. It’s been a big bet of this government, no question. It’s been successful. But I’m absolutely sure whatever government comes in now, tourism is the way to go. It’s a way to get to remote areas and connect overseas tourists or local tourists who have the money with needy communities. And between them, you can make the connection and take some of these communities out of poverty and give them a little more dignity.

Finance Colombia: I’m super excited for you all, of course, as an organization and as people. I know a lot of you are involved in this. But then also for Colombia, because of the positive benefit that it can have for Colombia. Again, I think it’s a win for you all as an organization, it’s a win for Colombia as an economy and as a people, and it’s a win for whatever financial and commercial partners that are involved in this. And so I’m super optimistic. I can’t wait for my first ever seaplane flight. I know that airlines love to have these inaugural flight things- And I’m going to be mad if I see it in the news and I didn’t hear from you [Laughs.] Yeah, you’re going to be waving down from me from up the final approach right here, right? So I’ll be calling you on WhatsApp there. But thanks a lot for your time, Rupert. Always fun to talk to you guys, again, thank you also for your contributions as an individual. And you wouldn’t say this, but as an expert. It’s more fun because I don’t always agree with you, and that makes me nuts sometimes. But it makes it fun, you know. And so can’t wait till the next time. Keep us updated and count on us to keep the public posted on what’s going on at Alma Air.

Rupert Stebbings: [Laughs.] We’ll wave. No problem, it’s alright. [Laughs.] That’s life! Great, man. Thank you for your time, and I will see you on board in some place you didn’t know you could get to. Cheers, man. Take care.

Finance Colombia was present during Vitrina Turistica 2025, the huge travel industry trade show put on in Bogotá by ANATO, the travel industry trade organization. During a presentation given by JetSmart executives outlining the airline’s growth and plans for Colombia, Finance Colombia Executive Editor Loren Moss was able to ask a few questions of  Chief Commercial Officer Victor Mejia. Colombia Country Manager Mario Garcia was also on hand. By clicking above, the reader can hear the original interview in Spanish.

Finance Colombia: Victor, very kind of you. Thank you for weighing in on this. My question is, I saw that when purchasing my ticket to fly here, I could now put my American Airlines AAdvantage loyalty program number into my JetSmart reservation. How has that reception been? And taking into account your alliance with American Airlines since you are growing internationally, can you grow to North America and more destinations in the Caribbean? Or would the strategy be to leave that to your partners and connect through them?

Victor Mejia: No, thank you for the question. Look, the truth is that to offer AAdvantage, AAdvantage miles for all JetSMART travelers so that they can accumulate them by buying tickets and continue flying with us, and then use their miles to redeem all the options that American Airlines has to visit in the world, it is a great benefit. We are very proud of being able to share and offer it to our travelers. So, we invite everyone to enter their AAdvantage number every time they buy a ticket on JetSMART, so they can receive the benefits of flying.

We will continue to expand our airline, mainly in Colombia; like the news we just saw, our Cali-San Andres flight. And we will continue to look for the opportunity to bring in air connectivity. American Airlines is our partner, we are there supporting each other through code share flights, and we will be bringing that to Colombia in the future. So no, definitely the options to provide international connectivity, either directly or through our alliance with American Airlines, will continue to be there.

Finance Colombia: And the importance of having Indigo Partners as an investor?

Victor Mejia: Yes well, Indigo Partners is our airline’s founding partner, they have more than 20 years of experience with the low-cost model around the world, and they are very tied to and very involved with the airline. We work hand in hand in all the management with Indigo. They also help us view the global perspective of aviation. And in the part of fleet acquisitions, which is why we can have the newest fleet in South America, we were recently recognized for that again, and continue to receive brand-new aircraft from the factory, Airbus A320 and A321. Those are some of the strengths of belonging to the Indigo Partners group.

JetSMART discusses the airline’s growth in Colombia

Ana: JetSMART’s commitment to connectivity and tourism in Colombia is undeniable. We are in this 44th edition of the ANATO Vitrina Turística 2025, which is the most important event of the sector in the country, and the best venue to deliver great news. Since it arrived in Colombia in March of last year, JetSMART has revolutionized the way Colombians travel, Smart model, with its ultra-low-cost model, where passengers pay only for what they need. Connecting more cities, facilitating access to flights through very low fares. Today it continues to expand its presence in the country, giving more Colombians the opportunity to fly in an affordable, efficient way and with the most modern fleet in South America, the youngest.

Today we will share with all of you the airline’s progress in Colombia, we will do a presentation, and so I invite Victor Mejia, JetSMART’s Chief Commercial Officer to provide all this information. So of course once again, we welcome Victor. Go ahead.

“And we have been serving the Colombian market since March of 2024. Yes, we have six international routes from Colombia.” – Victor Mejia

Victor Mejia: Thank you, Ana. Good morning everyone. It is a pleasure to be here again at Anato, sharing with you -there are some familiar faces from last year as well- the JetSMART news. This year we are also bringing good news, and we wanted to take advantage of the Vitrina Turística de Anato, what better place to do it, than to tell you how we did in this first year of operation? But also to bring good news, so I hope it will be to everyone’s liking. For those of you who we haven’t had the pleasure of knowing, or have not had the opportunity to get to know JetSMART, let me tell you a little bit about our airline.

JetSMART is owned by the Indigo Partners investment fund, a private investment fund based in Phoenix, Arizona, which has airlines all over the world in the ultra-low-cost model. One of these airlines, which may be familiar to you, is Volaris in Mexico, which is the number 1 or 2 airline in Mexico. You also have Frontier in the United States, there is also the Wizz Air airline in Europe, and Cebu Pacific in the Philippines, and for South America we took on the task of founding JetSMART, in 2016. The company started flying in July 2017, and since then we have been serving different countries in Latin America. And now we are going to tell you a little bit about how we’ve been expanding. So a bit like I was saying before, with the Indigo Partners group that has more than 20 years of experience in ultra-low-cost airlines around the world.

Also our mission; well we came here because we want to connect 100 million people. So far we are already 35, we are getting there, moving forward in the middle of a pandemic also, which was challenging for the whole sector, for all sectors I think. But well, for the aviation sector, it was especially challenging. But we are on that path, and as part of that path, we have opened operations in different countries in South America with our Smart model. It is an ultra-low-cost model that has been the fastest growing in the world in recent years; in Europe, it is already very mature, and in the United States as well. In South America, we have already been in different countries for several years with the low-cost model, which is very well known in Colombia.

There were important changes in the sector, we saw the opportunity, and that is why we are here, to serve by bringing back the low-cost model to Colombia. Our models, new airplanes, we are going to talk a little bit more about that. Our prices, as well, are low, so that people can travel a lot, can select what they want to customize in their trip, and what they want to pay for. Because the ticket they are going to buy with JetSMART, the lowest fare possible, is going to allow them to travel from point A to point B, and the passenger can customize their trip, choosing if they want luggage if they want a specific seat. It is a model that is a bit more transparent as well, that allows the passenger to not pay for what they do not need.

In our strategy, we also try to have routes, what we call Smart routes, which are routes that do not necessarily go to the big hubs that exist in the different countries, but that connect point-to-point cities that need air transportation, and that are not being served. So we have been adding routes between cities that did not normally have an air connectivity service. As for our fleet, well, in the year 2028, we will be reaching 124 aircraft. We currently have 44 aircraft in operation. The request was made in a historic aircraft order that we have made hand in hand with Indigo Partners and the other airlines of the group. They are already committed, they are already signed and purchased, so it is the most prominent aircraft reception process we have, and in permanent growth.

We have aircraft of the Airbus A320 and A321 family. Of A320 we have the A320neo fleet, and of A321 also neo, which is the most efficient aircraft available to date. We are the first operator in South America to have this type of aircraft. The interior of our aircraft they are brand new, they are efficient, with E-Leather seat technology, which is very comfortable and light. Part of our model is to be very cost-efficient to translate that cost-efficiency into pricing for consumers. We are committed to sustainability; our aircraft represent the diversity of the region; each aircraft has its own identity, an animal from the different countries where we operate. We work with different environmental conservation entities in different countries, and we are bringing that identity to the tails of the airplanes.

We are very proud to share with you a piece of news, a scoop from a couple of days ago, and that is that once again Ch-Aviation, which is an aviation institute that evaluates all the fleets around the world, has recognized and verified that we have the newest airplane fleet in South America, once again for the year 2025. This is a product of the fact that, as I shared with you before, we are constantly receiving new aircraft from the Airbus factory, so this is going to be something that we believe we will be maintaining for some time because these aircraft will continue to arrive every year.

Also one of our partners, a minority shareholder of the company but also a commercial ally, is American Airlines. We have a very broad commercial alliance that involves code-share flights, which we do not have in Colombia yet, but they will come and we will be sharing them with you as soon as they do. But we do have them in other countries in South America. Also, the frequent flyer program, AAdvantage, in which today, AAdvantage frequent flyer program members can earn miles when they buy tickets on JetSMART, and fly with JetSMART. And you can redeem those miles in America and fly all over the world. So it’s a very, very important partner.

As I was sharing with you, in 2017 we started flying, and we took on the task of bringing air connectivity to all of South America. Currently, we serve South America with 81 routes, we serve 8 countries, and we have domestic operations in 4 countries. The first one we started in Chile in 2017, later we went to Buenos Aires, Argentina, and we have served the entire Argentine domestic since 2019. Later in the pandemic, since we were all cooped up at home, we got creative and decided to open in Peru, so we started operating in Peru. And last year, finally, with great pleasure for many of us who have a past linked to Colombia, we arrived in Colombia.

And we have been serving the Colombian market since March of 2024. Yes, we have six international routes from Colombia. And for this, we are going to talk a little bit more about our arrival in Colombia and how we have been doing so far, what we have been up to this last year, so I want to pass the floor to Mario Garcia, our Country Manager here at JetSMART in Colombia. So, Mario, the microphone is yours.

Mario Garcia: Good morning. I’m very pleased to be here and with a full house. I would like to tell you a bit, after what Victor explained to us, about what has been done throughout South America, and what we have done in Colombia. In Colombia, out of those 44 airplanes, we have 8 airplanes operating, 320, and we have these six international routes. We connect Cartagena, Medellín, Cali, Bogotá, with Santiago, Lima and Antofagasta. It has been a very fluid and year-round operation. And now to talk a bit about domestic flights. We started operating on March 14 of last year, and we already have, with what we are going to announce now, 19 domestic routes; we serve 10 cities; last year we flew two and a half million people; we had close to 14,000 operations; 14,000 take-offs in 9 months.

That incorporation of airplanes was practically one airplane per month, a very accelerated growth, and in order to bring airplanes and air travel closer to Colombia. Today we have one of the highest per capita flight averages in the region; 0.8 flights per person, and we want to be a support for more Colombians to fly and get closer to airplanes. Since we have been flying, 38% of passengers have flown in a plane for the first time with us.

On connectivity with the San Andrés Archipelago

Audience member: I would also like to ask you, we know that yesterday you met with (San Andrés & {Profidencia) Governor Nicolas Gallardo. What other things could you anticipate for us (from the San Andrés Archipelago)? What other, let’s say, destinations are also being explored to connect San Andres, both nationally and internationally? Thank you.

Victor Mejia: Thank you for your questions. We are very pleased with the performance of this Medellín -San Andres route. We had a very good reception from the public, not only in Medellín, but we also made international connectivity. The idea is that both from Medellín and from the new route we are announcing now, Cali-San Andres, there will be international connectivity. To Cali, we fly Santiago-Cali and Antofagasta-Cali. We are the only ones flying those direct flights to the city of Cali, and the idea is to also use this as a connection point to the San Andres island. Our purpose for the time being is to continue gathering more opportunities.

Hopefully, we can turn these four frequencies into more, if we have the reception we expect from the public, and through that, we can make the flight to the island from different points more viable. So let’s continue working hand in hand, it is truly a pleasure to receive the support of both the local media and the government, and with all the actors and tour operators of the island. We will be bringing you international connectivity through the two points of  Medellín and Cali.

Flights to Arauca, via Santiago Pérez Quiroz Airport, will run four times weekly, while connections to Quibdó, via El Caraño Airport, will operate three times per week. These routes aim to strengthen regional connectivity, and Avianca’s CEO, Frederico Pedreira, highlighted the airline’s intent to support regions needing robust transportation access. This expansion adds to Avianca’s 40 domestic routes, making it one of only a few air carriers with year-round service to various regions, from San Andrés to Leticia.

Aligned with Avianca’s social strategy, the new routes facilitate access to essential services, including healthcare. Through partnerships, Avianca supports social organizations in delivering medical and humanitarian aid to remote areas, benefiting vulnerable communities in places like Chocó and Arauca.

Flight schedules for these routes are subject to government approval, and tickets are available via Avianca’s website, mobile app, sales points, and travel agencies.

Avianca will operate the Bogotá–Havana route using Airbus A320 aircraft, each with a 180-passenger capacity. The daily flights are projected to offer over 2,500 seats weekly between the two cities. Passengers can now purchase tickets through Avianca’s website, mobile app, physical sales locations, or travel agencies.

David Alemán, Avianca’s Sales Director for Colombia and South America, stated that this new route will enhance international connectivity, allowing travelers to reach Havana via Bogotá. “This direct route provides over 2,500 weekly seats, supporting our commitment to make air travel accessible to more people,” Alemán noted.

Route Itinerary: Bogotá–Havana

Frequency: Daily, starting December 16

U.S. Travel Restrictions

U.S. citizens, residents, or any individual departing from or transiting through the United States to Cuba are prohibited from traveling for tourism purposes. U.S. persons may only travel to Cuba if they fall under one of 12 categories permitted by the U.S. government or hold a specific license. Further details on permitted travel categories can be found in the U.S. regulations here.

Specifically for this summer high season, the Bogotá-based carrier will be operating six international routes between:

• Cali and New York
• Cali and Miami
• Cartagena and New York
• Cartagena and Miami
• Medellín and Orlando
• Pereira and New York

Tickets are already available across each flight.

The routes will be operated on A320 aircraft with capacity for 180 passengers, representing an increase of more than 11,000 seats each week across all six routes.

“We continue to bet on Colombia as a connectivity hub in Latin America and part of that commitment has been to strengthen our point-to-point operation to provide more direct connectivity to the regions of Colombia while facilitating the arrival of more tourists to get to know the country of beauty,” said David Alemán, sales director for Colombia and South America at Avianca.

The problem, at least as both competitors and Colombian airline regulators saw it, was that a combined Avianca – Viva merger would control too much of Colombia’s domestic aviation market. Aerocivil, Colombia’s civil aviation regulatory authority originally rejected the merger, but then on appeal by the two airlines, Colombia’s Ministry of Transportation (Mintransporte) ordered Aerocivil to at least reconsider the deal, which it is currently (as of publication) doing. All parties expect a ruling shortly.

Complicating the situation, competing airlines Jetsmart and Latam, both out of Chile, have in the last month, submitted competing offers for Viva, much to the consternation of Viva’s controlling shareholders. The way this plays out may mean the difference between dominance and diminution for Avianca, though with multiple suitors, the survival of Viva seems to be more secure than last autumn when Aerocivil first ruled against their deal.

Here are some of the major actors in the hunt to acquire Viva:

MOBI FIA — MOBI Fundo de Investimento em Ações Investimento no Exterior was the controlling shareholder of Brazil’s GOL airlines, controlled by Constantino de Oliveira Junior.

GOL — Founded in 2001, GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL e B3: GOLL4) is Brazil’s largest airline. Operating on the low-cost model, Gol is primarily a domestic airline serving many Brazilian cities, but also flies to several international destinations throughout Latin America.

Avianca — Once controlled by Germán Efromovich, a South American Magnate with ties to Bolivia, Brazil and Colombia, he lost control when he defaulted on a loan from US based United Airlines collateralized by his controlling interest in Avianca.

South American magnate & former Avianca chairman Germán Efromovich

Avianca was founded in Barranquilla, Colombia by German entrepreneurs over 100 years ago, but had its corporate domicile in Panamá. After filing for bankruptcy, Avianca still has a Colombian base of operations but is domiciled in London.

Today, Avianca is owned by private equity firm Elliott International L.P., United Airlines controlled South Lake One LLC, and Kingsland International Group, which is controlled by Efromovich nemesis, El Salvador magnate Roberto Kriete. Kriete’s father started TACA airlines which Kriete merged with Avianca in 2013, giving him a minority stake in Avianca through his Kingsland Holdings. Kriete and Efromovich soon fell out though, after Kriete accused Efromovich of mismanagement and self-dealing. Ironically, Kriete opposed Avianca’s dealings with United Airlines.

In May of 2022, Avianca shareholders, through a vehicle called Castlesouth Limited, acquired a controlling economic interest in Fast Colombia S.A.S., the legal name of the airline known as Viva. Avianca could not yet take voting or operational control of Viva as the deal would have to be approved with regulators. It is analogous to acquiring non-voting shares in a company. Avianca shareholders also hold a convertible debt instrument from Chilean low-cost carrier Sky Airline S.A. In other words, Sky owes money to Avianca through a loan, but that loan can be converted into equity.

United Airlines — One of the largest legacy carriers in the United States, United (NASDAQ GS UAL) participates with Avianca and Panamá’s Copa Airlines in the Star Alliance. United became a major shareholder in Avianca when Germán Efromovich defaulted on a $400 million USD loan from United collateralized with Avianca shares. Apparently Efromovich took out the loan in an attempt to save his faltering Brazilian and Argentine airlines, which eventually failed.

United now holds its interest in Avianca through an entity called South Lake One LLC.

Abra Group — MOBI FIA entered into a deal with Avianca’s owners, South Lake One, Kingsland International Group, and Elliott International to combine GOL and Avianca under one UK-based holding group called Abra Group Limited, while retaining separate brands (at least initially). The new entity would conceptually look something like Europe’s International Airlines Group, that operates European airline brands Iberia, British Airways, Aer Lingus, Level and Vueling under one umbrella holding company. The Abra Group also seeks to add Viva to this, but so far their plans have been thwarted by Colombian regulators.

Roberto Kriete is chairman of Avianca, Abra Group, and Kingsland Holdings

Roberto Kriete is the chairman, Constantino de Oliveira Junior is the CEO, while Avianca’s CEO Adrian Neuhauser and GOL’s CFO Richard Lark are co-Presidents.

Jetsmart —Chilean low-cost airline that has also announced its desire to buy Viva. Jetsmart is majority-controlled by US-based Indigo Partners, an aviation private equity firm. American Airlines also has a minority stake in Jetsmart, though American is said to be interested in taking a stake in Colombian low-cost airline startup Ultra Air.

Jetsmart already flies between Colombia and Chile, but the airline has also been seeking entry into Colombia’s domestic aviation market. Last year, Colombian regulators tabled but did not reject Jetsmart’s entry, asking for more information on the airline’s relationship with American Airlines, and also expressing doubt that Jetsmart had the fleet capacity. This year, Jetsmart is due to take delivery of 14 new Airbus A320neo and A321neo aircraft, and has the stated ambition of a 100 aircraft fleet by 2026.

Indigo Partners — US-based aviation focused private equity firm established by William Franke. Indigo is an investor in Norway’s Wizz Air, Frontier Airlines in the US, Volaris in México, Cebu Pacific in the Philippines, and Canada’s Enerjet. Indigo also invested in Spirit Airlines and Tiger Airways. Though Indigo is an investor in Volaris with Kriete and Kingsland Holdings, its Jetsmart is acting against the interests of Kriete’s Kingsland, Avianca and Abra Group by competing for Viva.

Latam—Another Chilean airline, Latam is the largest airline based in South America, though it holds a minority position in the Colombian market. Latam was formed in 2012 when Chilean LAN and Brazilian TAM agreed to merge. The airline rebranded itself from the LAN and TAM brands to LATAM in 2015. Latam participated with American Airlines in the Oneworld alliance, but Delta Airlines broke that when it took a 20% financial stake in Latam in 2019. Qatar Airways also has a minority stake in Latam. This month, Latam also announced its intentions to compete for the acquisition of Viva.

Castlesouth—Castlesouth Limited is the UK based entity that acquired the majority economic interest in Viva air last year from Irelandia Aviation, but must wait on approval from regulators before it, Avianca, or Abra can take over voting and operational control. Castlesouth, like Avianca, is owned by Kingsland Holdings, Elliott Management, and South Lake One (United Airlines). Castlesouth through its lawyers,  Philippi Prietocarrizosa Ferrero DU & Uría, has publicly stated its strong preference for its deal to go through between Avianca and Viva rather than between Viva and competitors Jetsmart or Latam; to be expected as Castlesouth is controlled by Avianca’s shareholders.

Elliott International — Elliott International is an investment vehicle owned by Elliott Investment Management, a US based hedge fund controlled by billionaire Paul Singer. In the past Elliott has invested in projects of former Avianca controlling shareholder Germán Efromovich, and has since then held interests in Avianca through its bankruptcy to the present.

Irelandia Aviation —An aviation private equity firm with a track record of successfully developing early-stage airlines. Irelandia was instrumental in the launch and growth of Viva, and also Mexico’s Viva Aerobus, Singapore’s Tiger Air (now merged with Scoot), US-based Allegiant, and its original success, Ryanair.

Viva was the brainchild of Mexican entrepreneur William Shaw, who now runs Ultra Air.

Kingsland Holdings — This is the investment vehicle of El Salvador tycoon Roberto Kriete. Kingsland Holdings holds Kriete’s shares in Avianca, and in Mexican low-cost carrier Volaris. Kriete’s father founded TACA airlines which merged with Avianca in 2013. Though Kriete sued Avianca because of its dealings with United Airlines, United ended up installing Kriete as Avianca’s chairman after ousting Germán Efromovich, who initially did the deal with Kriete. Kingsland is now a shareholder of Abra Group, and of Castlesouth Limited.

Viva — The subject of it all, Fast Colombia S.A.S. was the brainchild of Mexican entrepreneur William Shaw, Juan Posada, Gabriel Migowski, and Frederik Jacobsen. The concept of a Colombian low-cost airline was actually the subject of Shaw’s Stanford University MBA thesis. The four presented the idea to Irelandia Aviation’s Declan Ryan who agreed to fund the startup, along with other investors, such as Colombian insurance and banking concern Grupo Bolivar. None of the founders remain with the airline, though Shaw went on to form competing low-cost carrier Ultra Air, and is a vocal opponent of the Viva-Avianca merger. Viva also owns a Peru subsidiary that operates domestic routes throughout the neighboring country.

Viva is run by Argentine-born former Latam executive Felix Antelo, who has guided the company through rapid international expansion and the COVID pandemic. Unlike Avianca and LATAM, under Antelo’s leadership, Viva has been able to avoid filing for COVID-related bankruptcy, though the company has recently entered a voluntary debt mediation process under Colombian law. UPDATE: Felix Antelo resigned last week and has been replaced by Viva executive Francisco “Pacho” Lalinde.

Viva is run by Felix Antelo

Viva’s growth has come largely at the expense of Avianca, with Avianca carrying 36.3% of Colombian domestic passengers, and Viva at 16.2%. Before Viva’s launch and a devastating pilot strike and lawsuits between shareholders Kriete and Efromovich, Avianca controlled over 60% of domestic traffic. Viva is quick to point out that their low-cost model also competes with terrestrial bus lines in Colombia and Peru, and the airline is proud of how many passengers have flown for the first time with Viva because of its accessible fares.

Latam held 20% market participation, Wingo, a Colombian low-cost subsidiary of Panamanian carrier Copa held 4.5%, Easyfly, a Colombian carrier specializing in smaller cities had 4%, and government owned Satena, which flies to more remote destinations, 2.9%. Other airlines held 18.1% of the market. Ultra air has rapidly been growing and this year we can expect it to have gained significant market share.

Viva’s management has issued several carefully worded statements urging the Colombian government to approve its acquisition by Viva, though both airlines prefer to call it an “integration” as Viva and Avianca shares would have a common owner. Avianca has pledged that Viva would continue to operate separately under its own brand.

American Airlines — American Airlines (NASDAQ: AAL) holds a minority stake in Jetsmart, which has submitted an offer for Viva. American Airlines had a close working relationship with Latam which was ruptured when competing US legacy airline Delta took a stake in Latam, as the airline seeks to expand its presence in South America.

Delta Airlines — Delta Airlines (NYSE: DAL) holds a minority stake in Latam, which has submitted an offer for Viva.

Qatar Airways — Qatar Airlines holds a minority stake in Latam, which has submitted an offer for Viva.

Sky Airline – This Chilean low-cost carrier owes money in the form of a convertible loan to the shareholders of the Abra Group. This loan could conceivably convert to equity, in which case the Abra Group would also become a part owner of Sky.

Ultra Air — Colombian low-cost carrier formed by Viva co-founder William Shaw, who after several years, left Viva on somewhat bitter terms after building the company and finally serving a short stint as CEO. Though the airline was his brainchild, he never had control of the airline’s board, and his shares in the company became diluted though multiple capital raises. On behalf of Ultra, Shaw has been a vocal opponent of the Avianca-Viva merger.

Analysis: A missed connection?

Should Abra Group manage to consolidate Avianca, Viva, and Gol, it could potentially dominate the South American airline market, especially the Colombian domestic market where it would have a dominant position. Strong competition would remain for international routes from carriers like Latam and Copa. On the other hand, should Jetsmart or Latam manage to acquire Viva, it would spell bad news for Avianca, which would continue to face a strong competitor, now financially rejuvenated. Avianca, once known as offering a higher-end passenger experience, now suffers from a dismal reputation with travelers, and a muddled brand that is stuck somewhere between a legacy full-service carrier and a low cost competitor to Viva.

If Avianca’s shareholders are unable to acquire control of Viva, they will have to seriously revamp its brand strategy and determine an identity, because Colombia’s aviation market is becoming intensely competitive. New airlines are entering; we already have spoken of Ultra Air, but other new carriers are coming such as Arajet. Low-cost carrier Wingo is still relatively small, but is wholly owned by Panamá’s Copa, which is financially very healthy and enjoys an excellent market position.

A decision regarding the Avianca-Viva tie up is due soon. Should Aerocivil reject the deal again, expect Avianca shareholders, through Castlesouth to fight it again, conceivably appealing as far as Colombia’s supreme court. Avianca has stated publicly that the acquisition is to save Viva, but there is no doubt that this deal is critical to Avianca’s survival strategy, as Viva has been Avianca’s single biggest competitive threat.

In any case, it is unlikely that Viva will be alone for long, as alternative deep pocketed suitors remain in a holding pattern.

Stay tuned, and be sure to subscribe to Finance Colombia for timely updates and breaking news on this and other important deals relevant to investors and executives active in Colombia.

During October, which Viva has designated as the pink month, the company implemented the ‘Manos a la obra’ (hands to work) campaign, focusing on three fundamental pillars:

1. Promoting inclusion, through training programs for decent employment with which, so far, 17 young people have already been trained around the country as flight attendants.
2. The care of the environment, being founding allies of the Animal Bank, the first bank for biodiversity in Colombia and, finally,
3. Generating social impact with its yellow heart flights, with which Viva and the Foundation have benefited more than 120,000 people so far in 2022.

To these three terrestrial programs, an aerial experience was added, this time aboard the ‘Pink Giant’, one of the company’s fleet of Airbus A320 aircraft. There, the passengers had a flight full of surprises and messages of breast cancer prevention by the crew, who were trained in the realization of self-examination and warning signs for the early detection of the disease that afflicts thousands of Colombian women.

Viva & the Viva Foundation already have 17 flight attendants working that have graduated from the Manos a la Obra initiative.

“Since the beginning of Viva’s operations, every year we commemorate ‘the pink month’, carrying through the air a message of hope and prevention through the skies. This year, with our “Let’s get to work” campaign we wanted to go further, seeking to raise awareness around issues such as gender equality, inclusion and diversity with the global agenda and its sustainable development goals. With these types of projects we have not only challenged the status quo and innovated in training and hiring processes, but we have also provided new opportunities to young people around the country who live in conditions of vulnerability. To this is added the positive environmental impacts that we have achieved from the Viva Foundation, the social arm of the airline,” said Tatiana Vásquez, the Viva Foundation executive director.

Viva is the only airline in Colombia that has its own nonprofit foundation, which is dedicated to the work for the social, economic and environmental development of the country. Among the beneficiaries of its initiatives, are the 17 graduates of the training program for flight attendants ‘Viva Sin Límites’, who are already matriculating into the ranks of Viva’s flight crew.

Next year, Viva Sin Limites hope to announce a new call for additional participants in this project, which will be open to the public so that more young people can access new job opportunities and thus further the foundation’s mission of inclusion both in the skies and throughout Colombia.

In other progress, Viva announced the training and hiring of 34 new agents for its Monteria contact center operations, executed in collaboration with Konecta, the airline’s passenger experience provider.  Mothers, heads of households, and young people without experience are key members of this team that reaffirms Viva’s commitment to breaking down the barriers of employability, where according to the most recent data from the Colombian statistics agency DANE, 27% of its young people neither study nor work.

These initiatives add to the positive impact that Viva is achieving through its foundation, the social arm with which it seeks to generate opportunities for education, inclusion and care for biodiversity. Currently, the foundation’s investments amount to more than two billion pesos in activities and projects that have directly benefited about 240,000 people in different departments of the country.

The Dominican Republic has a very strong reputation as a tourist destination, but now, a group of entrepreneurs hope the country can become both a hub for travel in the way that Copa has made Panamá a connection point, and home for a competitive low-cost airline with Caribbean flavor. Finance Colombia’s executive editor Loren Moss was able to speak to Victor Pacheco Mendez, the CEO and co-founder of Santo Domingo based Arajet. The low cost airline startup is already running routes between the Dominican Republic and regional destinations throughout Colombia, Perú, Ecuador, México, Central America, even island destinations such as Curaçao, Aruba, Sint Maarten and Jamaica.

Finance Colombia: I remember years ago there used to be Dominicana de Aviación but then for a very long time there has been no flag carrier in the Dominican Republic. The founder of VIVA—one of the co-founders, William Shaw was in the region, he was working on something but then he left to go and do other things; why has it been such a challenge to get an airline launched to cover the Caribbean and to be based out of the Dominican Republic?

Victor Pacheco Mendez: Well, I think that if you, if you research the failures within the whole Caribbean, you find that the list is huge, so there is a reason for that and a lot of it has to do with, most of the carriers that have tried to start in the region have been mainly opportunistic carriers that find some ethnic roots or somebody with some money that thinks that they can do some type of operation, but this is the first time that somebody really tries the ULCC (Ultra Low Cost Carrier) business model in the Caribbean.

Arajet CEO and founder, Victor Pacheco Mendez

So, I think that the first thing was figuring out what was the right model and once we did that—and William was one of my seed investors so, William was with us, I hired him in the beginning. At that time, we were called Flycana. A good friend of mine, William. But eventually his dad was falling ill, he was living in Mexico and he got the opportunity to go to Interjet and basically, of course he continues to be a shareholder in Arajet, but he left to do that.

And it took us out a long time, to get Arajet done because it was about putting together the right pieces; it was about convincing the government on changing regulations, to legislate on behalf of the commercial aviation space, it was about being able to compare the DR fiscally to other hubs and be able to convince the government that we have to able to have to have the corporate environment to be equal to other jurisdictions so that a local carrier could compete within the same, let’s say, environment, and that wasn’t the case when we started the journey so, we had to advocate and we continue to do so, we still have some what we called barriers that we are working [on] strongly with the government.

I think, if you see the newspapers of two or three days ago the [Dominican Republic] president said that he is sending from his office legislation that will make the DR (Dominican Republic) more competitive from a fiscal point of view. So, it’s been just a very difficult ride, just with the government piece alone has been very challenging and then besides that of course, we have assembled a team of experts that have built ULCC carriers in other continents, in other regions. In Latin América, for example, our COO is Garret Malone, who was the COO of Viva when Viva started in Colombia, eight years he was the COO of Sky Chile, so having Garret as COO tremendous experience, a veteran, it’s a great thing, he’s a great team member to have and then it was about finding the right capital provider.

We sold the business plan since 2017, 2018. We almost got funded in 2019 and then in 2019, we missed the boat, which is now a very good thing that we did, because then COVID came along. That would have been death! And then, in 2021 once the scare of COVID was leaving we went back to the institutional markets to sell our business plan again and we found a lot of interest. It was incredible, we were almost running an RFP to see who our capital provider was going to be and the main choice was not about valuation, for us the main choice was about who’s the right partner, who do we think as a firm, will support us and will believe in our vision of what we believe we can achieve with Arajet and about chemistry, you know

We ended up selecting Bain Capital and Griffin Asset Management just because we felt that with this guys were a good fit for us and now, I can confirm that having been working with them a little bit more than a year, that these are great partners to have, they, you know really believe in the vision that Arajet has.

Finance Colombia: Now, being based out of the Dominican Republic it’s interesting because for a long time the Dominican Republic has been an attractive tourist destination, but you have you already have some competition. For example, Viva flies between Medellín and Punta Cana, Wingo flies to Santo Domingo, if you look in other countries, American Airlines has historically jealously guarded its Caribbean routes and been very aggressive to try to battle competition when it comes between let’s say Miami and the Dominican Republic, or Puerto Rico and Dominican Republic, which has always been a popular route. How would you stay profitable or reach profit and then defend your market and grow your route network against such entrenched competitors?

Victor Pacheco Mendez: Look, Loren, we’re not inventing the wheel. I think that we’re applying the game book or the playbook that other ULCCs have used before. If you look at our 18 routes that are now on sale at https://www.arajet.com/  we only have direct competition in three routes, meaning there are 15 uncontested routes. This [strategy allows us] to mature and give you that oxygen that you need. So, it’s about serving brand new routes and about a mix…about some competition but when we finish creating our network of 54 routes, we will only have direct competition in about 25 of them, at that point.

So, it’s about when do you launch routes where you compete and how you grow brand new, existing routes and you have to try to balance out that. But the good news, and what you can potentially say about us that we will not compete with one carrier for more than six percent of our entire network

Finance Colombia: Now, I look at your route network. You are covering in the Caribbean Kingston, (Jamaica) some of the small islands like Aruba, Curacao, Saint Martin. What about destinations like the US market or Puerto Rico which is “kind of-sort of” the US market but certainly with Puerto Rico’s close ties to the Dominican Republic; What are your plans there? Do you have plans to expand outside the Latin American countries?

Because it looks like you’re already very mature and well along the way as you go, and I would think that also Santo Domingo could be a good kind of a transit point, if look at it. I am not telling you what your strategy should be, but I’m kind of asking the question: If you look at what Copa has done by making Panamá a connector between South America and North America, I always wondered, let’s say if I was flying from the US through a Caribbean destination maybe to a destination in South America, is that all viable? Do you have that in your plans?

Victor Pacheco Mendez: Without a doubt. The reason why we will connect 54 routes from Santo Domingo is because Santo Domingo will be a hub where we will be transferring passengers. So, if you look at what we have done, imagine now when we go north, we are going to fly to 17 destinations in North America that includes Puerto Rico. when we go north, we are not only taking the DR up north now, we managed to get a footprint in South America and Central America and the Caribbean. So, when we go north, it gives us some leverage because in the US you do have more of a competitive environment.

So, you can’t get away with operating, you know, 80% of your routes brand new, you are going to have more competition. So, that’s why people ask us: “how come you don’t fly into the US?” Well, we will fly to the US. We will fly to 17 points into the US but we needed to get a base down South into Central America and the Caribbean so that when we do fly into the north, we have the possibility to offer connections.

Finance Colombia: That’s smart. I think that if you look at the airline that Mr. Shaw started, they went international, went into Panama a bit early in their life, and had to retrench and pulled back out. But when they got stronger, then they went into US and now they have routes into Miami and Orlando and, I know that they have publicly said that they have some other ones in the works going into South America…Brazil, Argentina now.

So tell me, you mentioned some of the institutional investors, tell me about maybe a little bit about your history and the management what’s your background, I would imagine that you have been in the airline industry?

Victor Pacheco Mendez: Yeah, I started initially—it was the first airline in the Dominican Republic to ever operate new generation equipment. I initially started with an (Airbus) A320 chartering out of the Dominican Republic. The more confidence I got, the more I learned. That’s how I got the idea of changing to a ULCC model, but Arajet exists on top of that. Arajet is a reformatting of that charter that was called Dominican Wings.

Before the airline activities, I was in commercial banking, financial services, business development, real estate development, but I come from a family…my grandfather is an entrepreneur by the name of Victor Mendez Capellán. All of his businesses where focused on the diaspora.

So, in the sixties, he was the first IATA travel agent in the country, and he was responsible for sending a lot of Dominicans to work in the free zones in New York when we were living through a depression in the DR, so thousands and thousands of families, he managed to help them finance their trips to go work there and eventually all of the family would join them. So after that, that brought in American Express, so he represented American Express in the DR, and then that success brought him Western Union and he was the first agent ever, when Western Union went International. DR was the pilot and it had to do with his entrepreneurial track record. So, today he is 94, and his company which is now a commercial bank conglomerate, tends to the diaspora and they still exclusively represent Western Union.

Finance Colombia: Remesas Vimenca? I know them well.

Victor Pacheco Mendez: Yeah. That’s my grandfather. That bug inside of me because I worked with him for many years—what else can we do for our people? What else can we do for the diaspora? And an airline was…it wasn’t really about an airline. Initially, it was about how can I lower travel [costs] for our people? And how can we continue growing and supporting them? The only thing was that he thought that my idea was too ambitious, so he didn’t support me with capital.

He supported me with his heart and wished me well, and that is why it took me too long to get this done because you know I’m not a wealthy individual. I had to find partners and I had to raise money. In 2018, I raised my first $2.5 million (USD) in order to get this done and then we capitalized Arajet and with Arajet, we the retail value of the order we did with Boeing with the help of Bain and Griffin was up to the tune of three billion dollars’ worth of aircraft.  I never imagined it was going to be such a big transaction.

You know, now, we are the first airline ever in Latin America to be born with brand new aircraft and I was trying to solve for lower fares for the country, but it was a tremendous amount of factors, when we we met the people from Bain and they saw the vision, they said, ‘you know, we really believe in this but a country without having a carrier, a successful carrier of this scale needs an OEM meaning an aircraft manufacturer to be in the country as strategic partner,’ my business plan was leasing aircraft.

And so they said, ‘look, we really need to sit down with you because we don’t believe in this unless there’s an OEM based in the DR and to do that we need to buy planes from them.’

And so now, Boeing is established in the DR and they accompanied Arajet from the maintenance, technical and flight point of view, which is tremendously helpful and is the first phase of a partnership that will be successful.

Finance Colombia:  Wonderful. I appreciate you spending so much time with us. I cannot think of anything more difficult than to starting an airline, the only thing more difficult is making it successful. So, we are really glad to see you and want to see your continued success.

Headline photo: Arajet approach at Princess Juliana International Airport in St. Maarten (courtesy Arajet)