Gisela Cardozo: Good afternoon, I am Gisela Guijarro Cardozo. I am currently the coordinator of the Medio Magdalena group of the National Environmental Licensing Authority (ANLA). I am a chemist specializing in laboratory management, financial management, and organizational development. I have a master’s degree in leadership design and project management.

Finance Colombia: And Mr César.

César Zárate: Good afternoon. My name is César Zárate, and I am vice president of development for Wattle Petroleum. I thank you for the time you are giving me here. I am a business administrator with an emphasis in marketing management and a master’s degree in senior management from the University of Disney. I am a project structure for commodities. Whether it is oil, gas, or any mineral. We are now focused on natural gas in Colombia.

Finance Colombia: Thank you, and we must give thanks to the support of the Ministry of Mines and Energy, the National Agency for Hydrocarbons (ANH), as well as the gold sponsor in the event, OCP Ecuador. Well, then I think we have, if I am not wrong, in the presentations. No? Well, then let’s get started. Ah, yes, okay. Okay, to make it more interesting, we are going to make it more interactive, so with our speakers and also with you guys, with questions about the talks. So I want to start with César. And my question is, what do you think can be done in the short term to improve the charging factor in the gas fields here in Colombia?

César Zárate: Well, basically, it is to allow access to marginal fields or minor fields that companies like Ecopetrol have, which are not operating because they have them there without putting them into production. It is no secret that the operating cost of large companies can, not can, but it does impact the management of small fields. So, what the big companies do is simply: “Oh, it’s a small little field, leave it there.” For a small or medium-sized company, it may already be interesting. So, allowing access to those fields. But in the short term means the short term. What for? So that we can access and be able to manage any form of business that is interesting to the owner of the field too, to access and be able to start working those fields to generate not large quantities of natural gas, but it can impact production if there are plenty of them.

“We are talking about a very good quality crude. But in both places, something very important happens. The communities open the door to the companies.” – César Zárate

Finance Colombia: Gisela, is environmental management an investment or an expense for hydrocarbon projects?

Gisela Cardozo: That is a question where I have the ideal audience here to answer it, but well, I would like to give a general outline in this sense: How do we, as the National Environmental Licensing Authority, see the investment made in environmental management? Everyone here has talked about many very interesting lines, about clean production, about reducing CO2 emissions. All this is excellent for the environment. But why? Companies do it because it is beneficial for their accounting and financial balance, right? Of course, tax regulations benefit them, excellent, and then the company says, “Yes, we are going to make cleaner production”, but because it is profitable for the business. But they do not see environmental management that way. They see environmental management as “Oh, that’s what we have to do to comply with the authorities. That thing we have to do because it is an obligation.”

And it’s a nuisance. “Oh, they’re coming to follow up on us again this year. What a drag.” No. Environmental management has to be seen by the companies… and well, please help your CEO, your executives see it; it is an investment. An investment because every peso that you put into your environmental management, if you look at it carefully, is a peso that you are going to avoid spending on socio-environmental events that will bring you much more serious consequences in terms of investment. Every peso that you invest in knowing your environment and your context and managing it is a saving for the company in all its operations.

But sometimes it is not comprehensible to us why it is not seen that way within the companies. It is seen as if the operation is completely disconnected, environmental investment is something, and complying with environmental regulations is a nuisance. No. If you look at it, all your licenses and all your environmental control and monitoring tools give you the guidelines to be more and more operationally efficient. They give you the guidelines to avoid social conflicts and environmental conflicts. That can stop a project, and it can make you lose an investment.

It has happened with many projects. For example, you sometimes, when you are going to do a workover in your wells you say, you deceive yourselves, I think, you say, “Oh, no, this is going to be a very short-term thing. So we are not going to temporarily relocate a community that lives very close, or it is not necessary to have the equipment in case there is a spill. No, no, that’s all under control.” It should not be like that. You have some management and control measures that tell you that you have to follow them; however, you ignore them, sometimes because of costs, I think. But the worst saving that a company can make is the saving in its environmental management, that’s the wake-up call we make to you.

Finance Colombia: It’s true. It makes me think of Deepwater Horizon. Right? So if you do it, it’s cheaper to do it correctly. It’s cheaper to do it right, okay, and if not, you’ll pay.

Gisela Cardozo: Twice, thrice, and much more.

Finance Colombia: Yes, right, it’s true. Well, César, what medium-term policy do you think the government should implement?

César Zárate: The government could help the industry from a tax point of view and improve conditions, especially in the area of recovery. Why? Because that discovery has already been made, it has already been produced, it has already been paid for, right? And if an additional investment is made, more crude can be produced, more gas, without the need for having such high additional investments in exploration, in environmental licenses, in general, in the costs of an initial project. If there is a recovery, I, as a government, encourage the recovery of that crude and gas from the tax point of view or the point of view of return on investment. We are going to struggle with these years of natural gas shortage that we are experiencing. Because there is no shortage of crude oil, but with natural gas, the price is already showing a shortage.

We see that the Henry Hub in Alabama is at $2.15 USD, $2.20 USD, and has gone down to $1.80 USD. Here we have gas contracts of $8, $9, and $10 USD. That impacts the country’s finances and impacts the families because of the high costs. But if there are a series of tax benefits in the medium term by the government, many companies will be interested in working on recovery and production will increase.

Gisela Cardozo: Loren, if I may? César had said something in the previous question that I found very interesting, regarding the small fields, and that this could be an economy. And I was thinking about it from ANLA’s point of view; there are many of those small fields where we’ve asked the owners 5 years after they obtained the environmental license, and they have not started operations.

We ask them because the regulation says that the license may expire in a certain sense, right? And we ask the companies and we say to the owner, “Well, let us know if you want to continue if you are interested,” and most of them say, “Yes, but I am raising investment, I am doing something else.” Look, they are fields that already have an advanced process, an environmental knowledge of the territory, and they have already invested. It seems to me that the way to encourage, precisely, to increase this hydrocarbon production would be that. It would be very good. But bear in mind that after several years, the information must be updated, right?

Finance Colombia: Speaking of which, how to optimize. Or did you want to answer?

César Zárate: No, what Gisela says is something that would complement this process. We are wasting a lot of resources in the country, as you said yourself, there are many minor fields that the companies have abandoned. Now, are they economically viable for small companies? We have to evaluate it, but now is not the time to think, “Are they economically viable? Are they not economically viable?” No, we have to encourage that increment in production.

Finance Colombia: You talk about something very interesting. I’m from Ohio, and in the United States, the oil industry started in Pennsylvania, where the oil is very much like.

Gisela Cardozo: Shallow.

Finance Colombia: Yes, yes, and well, and also Ohio and Pennsylvania are neighbors. Standard Oil and the Rockefellers that was all in Ohio and Pennsylvania. And when they discovered oil in Oklahoma and Texas, which was like much better quality because we have a lot of sulfur, and it’s also a bit heavy. And when they had that light crude there, everybody left and left Ohio with corn and cows. But the industry almost died in its birthplace, where it was born, in Ohio and Pennsylvania. But something interesting happened, using technology and mostly small producers.

The structure is a little different here; the State owns the subsoil resources. In the United States, for example, it’s like Mom and Dad who have two avocados and two wells. Not avocados, but basically, you own the oil, and so then there are many producers, micro-producers. Like I have a friend who has an estate and they have four wells there, and every two weeks the tank truck comes, and it’s like it is here with the cows. I live in Antioquia, and there, those Colanta trucks always pass by.

Gisela Cardozo: Instead of milk, they take oil.

Finance Colombia: I understand that the legal structure is different here, but basically, I understand that in the short term, there is not going to be fracking here in Colombia. I understand that there is no desire from the government for that. But basically, what happened there? It was reborn by using that technology, and now that it has the technology that removes sulfur, the oil sector has been reborn in states such as Ohio, Pennsylvania, and West Virginia.

But not with Chevron, but with small producers. And so adapting to those things. Okay, if there is no fracking in the short term, there is no fracking, but there are many things that can be learned to make the small fields viable, not micro fields, but small fields here in Colombia. It is interesting and it’s worth looking into, not only the mega fields, right?

César Zárate: Correct. Because in the American case, and allow me to go a bit deeper, it’s the type of formations. The Utica Formation, which is the one in Pennsylvania, is a formation of heavy crude oil with sulfides, where not necessarily, but fracking kills, even if they are small producers.

The Eagle Ford formation in Texas is completely different. We are talking about a very good quality crude. But in both places, something very important happens. The communities open the door to the companies. What happens here in Colombia? No matter where you go, the community sees the operator as an enemy, right? Because they go, “Here come these guys, they take, and how does it benefit me?” Over there, it is the opposite, there it’s, “Come over, I welcome you because I am the owner of this farm and this subsoil is mine, and the money is for me, and the company is going to pay taxes.”

Here, the community sees the company as, “What are we going to get out of the company?” And so the company is strangled between, obviously, the taxes, between the royalties that have to be paid to the ANH for factories, that have to be paid to the ANH for the visits, right? All that economic burden is very heavy.

And the risk increases. Besides, when you drill and you make a mistake, 3 or 4 million are thrown away in the wells. Right? And if you hit a well, whatever it may be, a thousand, ten thousand barrels, whatever, then it’s, “Oh no, those bastards, of course they are taking it all.” So the issue is we have to change that paradigm, we have to look at how the communities can benefit more, but all this has to go hand in hand with a series of tax benefits for small companies, those that take the risk, and not all of them. For midstream and downstream, the risk is nothing. I already have something that I transport, or there is already something, so I set up the compression if it is natural gas. But upstream is: find, drill, have that frustration of if it was good, if it was bad, tell a story to the investors. That big factor, I would think that if we want to increase the production of both gas and crude oil, it is necessary to give more opportunities in terms of tax benefits, and opportunities in general, to small companies.

Finance Colombia: You talk about something important, it’s like the importance of safety for drilling technicians, and to do it, taking the environment into account, lowering the risks. And in that aspect, Gisela, how does uncertainty affect the knowledge of the physical, biotic, and social context for an environmental procedure, or in the productive stage of a project?

Gisela Cardozo: Very relevant to what we have been talking about, right? What is uncertainty? It is a lack of knowledge. When I do not know, the less knowledge I have, the more uncertainty I have, and uncertainty is a hidden cost. Uncertainty is error, so how do we remedy that? Uncertainty is always remedied with knowledge. What happens, and why do they fail? Many, or well, not many, fortunately, only some environmental procedures here, from the licenses, from the modifications requested by the sector, fail. Because even though there are some terms of reference that, as the authority we consider, are very clear, and are already well-known by the companies in the sector, they submit the minimum information possible.

The shortest. Careful, if it says scale 1 to 100,000, and we, and I mean, you, have information, you must have much more information at smaller scales, but you are not going to present it. It only says 1 to 100,000, and we are not going to have it ready either. So, what happens? They present insufficient information if we value the impacts of the zones. Understand that the contexts, due to anthropic interventions, especially now, have changed a lot and change very easily.

You may have done an environmental impact study two years ago, and now you submit it, and that context is already changing. We go to the field, we encounter different things, and as a rule, there is a time for the gathering of additional information, you are asked for that additional information, and you do not have time to present it. Why? Because you had planned that it would be easier to spare that environmental cost. For what? So always think about that, that the investment you are making in information in the context of your projects is not only environmental, it is operational, because it is information on geology, hydrogeology, geochemistry, animal habitat context, forestry, etc., where you are going to have to intervene.

A real-life case, as we call it, right? What happens? Well, a company has its environmental license, has its environmental management zoning, and says, “Done, the authority told me that I could put my platform on this site, it is within my permitted zoning.” And they go there and start building it, when the obligation, as you know, is to have a specific EMP when the platform’s intervention is going to be made. What is the objective of that specific EMP? To land on the current context and to a much greater level of detail. It is not a scale of 1 to 100,000 or 1 to 50,000. You already have it, because you should have gone to see where to build, what the land is like, “Is it geotechnically stable? What do I have nearby?” And you didn’t identify that some of the rivers that we have are very meandering.

Especially in the plains, in the valleys, the river moved its course, from when it was assessed, to the time when they were going to build the platform. And before they were outside the river’s course, when they started to build the rails, the platform, they were already drilling the well, with how much it cost to move the drills. All of us understand the high costs of the sector. And we get complaints, environmental complaints, we go to the area, no, the river changed its course, and now they were already in the area, in the protected zone. How can such a crass investment error be possible? All the lost investment, why? Because it cannot be allowed in our environmental regulations, they are resources.

It means continuously exposing yourselves to flooding on that platform, to contamination of a river, of an environment, and to social conflict. So, notice why I told you at the beginning, look at it as an investment. Environmental management is an investment. It saves costs, and all that waste of resources just because someone did not pay attention to something that, well, you could say was obvious, right? But no, look, and we miss it.

Finance Colombia: Right. And César, in the case of security in the areas, what could be improved?

César Zárate: Well. A few years ago, specifically three years ago, in our case and the case of the majority, the operators had agreements with the army for the protection of course of the workers’, of the infrastructure in general. Two years ago, we tried, not tried, it was time to renew that agreement with the army, and the army said, “No, the agreements are over.”

And they put us in a pretty difficult position. Especially the operators that are in areas that. Almost 99% of the operators are in difficult areas, in complex areas such as Catatumbo, it is pretty special because of the type of social conflict as all the outlaw groups are in that area. Having this type of contract with the army is key to being able to protect the investment, protect the workers, and protect the communities themselves.

We had a very sui generis case, where the army was passing through our lot, and there was fighting with the outlaw groups. And these groups decided to put dynamite where the army was going to pass. They did not care. Next to a gas pipeline.

You can imagine the kind of catastrophe that would have occurred if those fights had exploded at any moment. Think of a house, in your house, those who cook with natural gas, I think most of you here, right? You open the natural gas a little bit, and if you take too long to put a match… if it is automatic, well, it’s on, but if you take a little too long to put the match, it goes boom, and it explodes. And we are only at 120 PSI pressure. Do you know what a truck at 3600 PSI is like? Or a gas pipeline at 1200 PSI if you put something in it? So this type of protection in the case of hydrocarbons is key.

The government has to understand that this private investment must be protected, but more so that it is an investment in the life of the communities as well as of the workers. So, in my opinion, these types of agreements have to return; the government must understand that this is a key part of developing the industry. Added to the fact that nobody wants to put their money at risk in an area where the outlaw groups are putting pressure.

Finance Colombia: Wow. I imagine that risk, what that explosion would be like, about 3600 from here to Bogotá.

César Zárate: Exactly. The gas pipeline goes at more or less 1200 PSI. But let’s say, let’s put it at 800, 1000, but in the time the valve closes, that is a catastrophe. We have to solve the issue here in Colombia ourselves as a country, right? Solve this problem. But until that happens, the protection of the state, especially the military forces, is important.

Finance Colombia: Right. Well, another little story. In the same estate of my friend that I told you about, once a friend of mine came, she was Dominican, but well she was born in Manhattan, in New York. Many of you who have visited New York know that there is not a single tree.

César Zárate: Rich girls.

Finance Colombia: Exactly, basically Washington and all that. And there isn’t a single tree in New York. I couldn’t live there because there’s no green, nobody has a garden, or anything like that. So what happened? She won a scholarship or something to study at Ohio State, in my state. And then we went to southern Ohio, where the farms and all that are. And that was all exotic for her, because there like you have to go to a park to see a tree, like going to a zoo for us. And I was showing her, “Look, here that tree is a walnut tree and that’s a maple tree, and so on.” But she was like somebody super-very much an activist, very anti-oil, those people who are always doing shows in front of the bombs and stuff. And she’s like, “No, you have to do away with oil because look, it’s going to damage all of that.” And I set a trap. We are walking on the trail, on the estate, okay? It’s all forest because my friend didn’t plant anything; he only earned it through the oil, and they used the farm to escape from the city. So we are walking. She was telling me all about how if there is oil, we are not going to have any of the forest that we have. And I set up a trap very well.

So, walking and walking, we get to the first well. And that well the problem was that it was flooded by all the like, plants and bushes, and almost nobody came, because the forest was assaulting the well, not vice versa, and there were rabbits, raccoons, and things there. And I said, “Such as this one?” And, if she hadn’t seen a tree, it was her first time seeing an oil well. Okay, so I was like, “Tell me what you were saying?” and well, obviously she went quiet.

But my point is that there is a deficit, that there is a failure in education. You are from the industry, you understand the good and also the bad, the good and also the challenges. But I think, and I have noticed here, well, everywhere, when there is an emotional reaction about oil issues. And very few of the people have any direct experience or understanding of how the industry works. They only see it like once every 10 years, when there’s a big tragedy like Deepwater Horizon, or yesterday, a ship went down in a cyclone that’s happening now in the Philippines. So my question, Gisela, is, talking about education, okay, how to optimize the generation of environmental knowledge in the development of the projects? That doesn’t mean being “Oh, you have to be 100% pro-oil in all cases,” but having a balance and not letting fear and ignorance manage everything. What is the role, the part that education plays in this aspect?

Gisela Cardozo: Very much about this part you were mentioning, knowledge, and I say that the sector has the responsibility not only to consolidate that knowledge in the three basic components that, well, at least from the authority we handle: the abiotic, biotic, and social components, which are the main identified ones. They have to be reinforced. How can this knowledge also be strengthened? Look, when we talk about science, technology, and innovation, we have always identified three basic pillars to support it, which are the state, the companies, and the academy.

I mean, the academy, well, here it’s you, Loren, let’s say, right? Here are the three pillars that support this knowledge, and the three pillars that can help you reach the communities. Look, if there is a good environmental management group in a company, I insist again that it is an investment; it should not work as that accessory group that they have there, because the norm requires it, and then we must have it. No, it must be a group that must interact permanently with the operational part.

The operational part has to be nourished by what the environmental parts gather from monitoring and making decisions as well. Because investment decisions, as we were saying, if it is not viable environmentally, they stop them in time. But if nobody tells the environmental group, the environmental group is isolated, and so on. If you do not interact with the academy, the academy is an independent actor that the communities believe in.

We see many conflicts in the territory, and we see very responsible companies in the hydrocarbon sector. I would say that it is one of the sectors. Well, ANLA changed it to regions. And we had to take on in each region all the other sectors: infrastructure, energy, and we even manage zoo-breeding. So, if you compare the sectors, the hydrocarbon sector is one of the most organized in mining in general. There are some black sheep, right? But in general, they do a good job, they are responsible for the environment, and with the communities.

But I don’t know, it is as if they aren’t preoccupied with taking this knowledge to the communities. What we talk about, man, partner with the academy, reach out to them, explain to them. The communities, well, we go with you, and they say, “Oh no, right, you are from X company, you are going to defend your company.” Whereas if you take someone from the academy who is independent and objective, and most of them can be environmentalists, let them be objective and reasonable, and convey the reality, the truth. Do that exercise.

I was listening here to some of the previous speakers talking about their corporate social responsibility programs, environmental issues, and so on. But it seems that these communities never speak out. When does one hear this positive news? I don’t know if the sector is lacking, I don’t know if it needs more unity to, well, make a better use of joint resources and tell the communities the reality. Loren is right, someone who is here in Bogota, I remember because we also have a small farm, and once we took the children from my son’s kindergarten. Many years ago, right? And they arrived and saw a cow and those children: “Ah!” They had seen them in photos, but you don’t believe it. I was like, but what? The chickens ran away, scared of seeing the chickens, the chickens were chasing the little boy, and they were all like this.

They had never seen it; they are very much city kids. That’s what happens to us. And where is the public opinion, which carries more weight? Also in the cities. In the rural communities, anyone who comes along gives them false news. Or they think it is true that because you have an oil well next to you, you are going to get sick, you are going to contaminate everything you grow around you. Disprove that. With what? With knowledge, with science, with education. Invest in that, it will be more profitable.

It is something that, many years ago, I visited Panaca for the first time, there in the Coffee Axis, with my daughter, who is now 22 years old, but at that time she was 14 years old, and she spent 2 years here in Colombia. And I loved the purpose that Panaca has, and that is to teach people from the city about the importance of the countryside. And I don’t know if it’s very feasible to put an oil amusement park, that would be something. But that was something. Because it was entertainment, but also didactic.

Finance Colombia: Like okay, families who go to the coffee parks come and also visit Panaca, and people, like your son’s classmate, know nothing about the countryside. I am also from a big city, but I was lucky enough to spend summers working on a farm in the countryside, so it is so important to start with young people.

Gisela Cardozo: Exactly.

Finance Colombia: Okay? To have… my point isn’t one side or the other. I think of myself as an environmentalist, but I am not an extremist. I understand the importance of Colombia having self-sufficiency in its resources. Ok? Yes, we need to preserve, we need to advance, to evolve, but that doesn’t mean that tomorrow we cut everything.

And who is going to suffer the most? The people with fewer resources, if we do that. Yesterday I took a picture and sent it to my wife and about 20 of my best friends here. Because the EPM guy came over, and I am an EPM customer, he told me that the price of natural gas is going up by 100%, okay? And I already pay for EPM, I pay for gas, and I thought, wow. I said to my wife, “Look, we are going to complain and be angry, but either way, we are going to pay the bill.” But there are people in Comuna 13, in Tricentenario, in Santo Domingo, there in Medellín or in Soacha or Usme or here, where it is a struggle, where if they raise the prices 100% because of shortages, okay, for an idea up in the clouds, they are the ones that are going to suffer the most. And what is going to happen? What happened in the Dominican Republic and Haiti? In Haiti, where they do not have natural gas distribution in the tanks like here in the Caribbean, people continue burning firewood, ok? Talking about deforestation, talking about the loss of the Amazon and the forests here, if people don’t have access to natural gas, they are going to go back to burning.

César Zárate: The forests.

Finance Colombia: Exactly, something we are fighting against. So, you have to think about the effects and the consequences beyond the next step. That is one reason why I think education is so key. I understand if, in Colombia, you as a country say, “We don’t want fracking.” Super, that’s fine. But what I don’t agree with is, like, about 3 years ago, this was in the news, in the last administration, and there were protests and such. And I said I’m going to do a survey. I asked five people, my wife and a few others, “Okay, are you for or against fracking?”, “Against.”, “Okay. What is it?”, “Something gringo.” “Well, I’m something gringo, but.” But really, they had no idea what it was. But we’re against that because they heard, I don’t know, over protests, that it’s something bad. And, well, I don’t take a position like should have it or shouldn’t have it. But when you are making decisions from a point of ignorance, from a point of fear of not knowing, at least. Make your decision, be against fracking, but be against fracking because you know what it is. You already know what it is. But with the people who vote, people like the public, it’s important to have democracy; it doesn’t work like that. The people are ignorant. So, talking about the processes, on the environmental aspect, how do those processes influence the development that you do?

César Zárate: Well, the environmental issue it’s as far as it is wide. But usually, the people who are involved in making the environmental laws are well prepared, while others we consider lack a little bit of knowledge to be able to make this regulation.
The topic of fracking, for example, is something that the country needs. And the decision is very simple. How do we want the gallon of gasoline? Do we want it at 40 or 50 thousand pesos? And I don’t know any environmentalist who doesn’t love to fly in an airplane. They all love to fly in an airplane. Everybody loves to travel, don’t they? From what the price of JP54 is, 80 or 90 dollars a barrel, to how we want it? Do we want it at 200 a barrel? So that the ticket to Medellin costs (unintelligible) pesos? The decision is in our hands.

The issue that Loren and Gisela brought up, we just have to teach them. You have to take the children and show them the reality. Of course. Hydrocarbons produce CO2, the molecule. well, I have the best solution of all. Nature itself invented the most beautiful machine to capture CO2. They are called trees. It is simple. We are going to compensate for the emissions with trees until a definitive solution comes out.

Everyone has their own opinion, but on my part, if you are in an electric car, you pollute more. Hydrogen is the way. I think that the countries that are as advanced as Japan and Germany, with the hydrogen issue, will reach a solution very quickly; the United States, too, and that is the final solution. Because hydrogen is the most abundant element in the universe. So, I know that there will come a point when hydrogen will replace hydrocarbons, little by little. Because hydrogen cannot make plastics. The hydrocarbon part is the plastics and many industrial processes. But yes, with hydrogen in 20, 30 years, we are going to get to the point where we’ll say, “Okay, no more exploitation.” In the meantime, we have to be realistic. For one, we have to control climate change, and governments have to commit to a minimum amount of tree planting. We are wiping out our rainforests. What is the biggest polluter? The Chocó mafias take all the trees.

Let me tell you about a specific case. In the Andoas base, in Peru, where one of the largest oil fields in Peru is, the most shocking ecological crimes imaginable were committed. The first one: the operating company at that time would take the contaminated water and dump it into the jungle. We have 500,000 hectares; if we dump 2000, 3000, nobody notices. After a solution was found and the Peruvian government noticed and stopped this type of thing, the communities appeared. It is the communities themselves that pollute. When they were told the same thing, “We are not going to give you a contract,” The contract for the oil pipeline that goes from here, from the jungle to Talara. What happened? They put a pump on the pipeline every two months, every month, why? Because it was the communities who went, cleaned, fixed up, whose business it was. They would put it in a pump.

Then, when the government figured it out, they took it away. But today, a field of 180,000 barrels from here could solve the energy issue in Peru. It produces 8000. The infrastructure is completely disarticulated, and the communities are destroying the jungle. If an operator comes and cuts down a tree, they all go, “You are destroying the jungle”. But they, the communities, cut down the trees, they sell them, they don’t reforest. The operator tells them, “Here I have plastic bricks; let’s use the plastic that has been collected to make houses.” No.

All this is the result of ignorance. I think it is the only way. Education with children from a young age, showing them that it is a resource, that we need the energy, we need to move the ships, so that the global supply chain doesn’t collapse. We saw it with COVID-19. It more or less stopped, and the world collapsed. We need the plastics, we need to live; we need the gasoline; we need the jet fuel; we need that energy. And that comes from oil and gas. The rest is lies. The rest is demagoguery.

Tell me, when have solar panels replaced power generation? They replace a part of it, but look at the problem in Chile, they are stuck with thousands of meters of unusable solar panels. What do they do with that? They pollute. How do you think the electric car works? It works with the worst stabilizer of all. You have to remember when these mobile phones came out in the ’90s, when everyone would say, “Ah, it explodes!” And it was true. You plugged in the phone, and it was a lottery whether it exploded or not. Because lithium vibrates at very high frequencies. Then they figured out, you know what, there are stabilizers, like cobalt. “Ah, cobalt is the solution, yes.” Who takes the cobalt ores? They are this small. I invite you; you can go to Africa and see the disaster the companies left there. Children between 5 and 11 years old take the copper ore.

Finance Colombia: In Congo, yes.

César Zárate: In Congo. Digging out the little ores. At 11 years old, with leukemia. So, that whole tale about ethics and this and that, no. It is action. You have to overcome ignorance. We have to do research. We have to advance on hydrogen, but in fast steps, and we have to overcome ignorance. And children have to be educated so they understand we are in a world where electricity is not free. This is being transmitted by copper, isn’t it? We have to find the copper. Or we can bring a nuclear plant here to generate electricity. The decision is ours as a country, but we have to make it with knowledge, not assumptions. The road to hell is full of good intentions. The road to heaven is full of actions. It is to act. To overcome ignorance. That is what we have to do.

Finance Colombia: You’re right. Yesterday I was walking around the exhibitions, and we had some very, very interesting companies. I saw a company that does like geolocations, using the readers of where the oil pipelines are and things like that; there is one that has the high voltage cables that they need, that are resistant to high temperatures and such, like Distribution Plus, SIS MARCO, Promat, and Target Horizon. There’s another one there where they do like mapping, oh, I didn’t understand very well, I wanted to ask them because they do like very advanced things about what seems like mapping, or saying where we are going to map things. Talking to others like you guys, like my friend Slava, who does testing, non-destructive testing, he has to go over all that high-tech stuff. And the good thing about that is that it’s making the industry more efficient.

I think part of what we’re fighting for, of all this anti-oil sentiment, is because of history. In Cleveland, Ohio, where Standard Oil was for many years, in 1970, the river caught fire. Cuyahoga River, which runs through Cleveland, caught fire twice because of so much pollution. And at that time, when Rockefeller and those started, it was senseless, and all the factories, not just oil, but anything, dumped their stuff in whatever river was closest. We still have problems with PCBs. And they are still debating with General Electric about what happened in the Hudson River, which runs through New York. The debate was like, “Should we dredge and remove them, or should we just leave them alone?” General Electric wanted to leave it alone because they didn’t want to pay like 3 billion dollars. And it was for damages that they did, not now, but like 100 years ago in history, when it was a legacy. But even now, we’re still paying the price. We don’t want to, nor can we, eat oysters from the bay or anything like that. And my question then, Gisela, is what role does technology play? How can we take advantage of technology to enhance the environmental management of the sector?

Gisela Cardozo: We go back to this topic of the academy, innovation, science, and technology. We have to implement it. All of you have been talking here in this congress about having developed more clean technology, new systems for exploration, exploitation, refining, etcetera. But technology is also in the environmental part, please do not forget about us. The monitoring that you do is more effective when… Now the equipment, we have equipment that sends transmissions in real-time. They give you the alerts. The alerts, if they are having some kind of failure in the piezometric wells, tell you, “Hey, my concentration changed, I have hydrocarbons, or at least my conductivity changed.” And you go, “Oh, how come the conductivity changed?” Well, there must be some leakage, of what? Of deeper groundwater that is getting there, right?

But this transmission in real-time is fundamental. Look, ANLA is making a very big effort, it has been doing it for a while, 5, 6 years now, in generating a technological monitoring center that we have, where we are going to ask all of you to please go in. Now, report to us in a more, let’s say, standardized way, so we can feed from that data. That data is going to be available to all of you. Note that it’s going to be cost-saving in knowledge. Somebody has to submit an AI, somebody has to submit something from a region that has data. This tracking monitoring is more extensive than what you do for a license; it’s time data, and it’s multi-temporal. You can look at trends. You can get so much information from that in very large territories, all the ones that you report to us. And not only from the hydrocarbon industry, but we also ask that from the rails, well, the ones that we manage, 4G, hydroelectric plants, thermoelectric plants. We have information on air, emissions, and noise in the regions, and that data.

An institutional base is being consolidated, and it will be accessible – you know that all of ANLA’s data is public, and you will nourish from it. Please present us with the complete environmental compliance reports with good traceability. Not, “Yes, the information is in file X,” and file X never appears; it does not even have the name file X somewhere. You are going to be able to nourish yourselves from that. Knowledge is for everyone to reuse. But technology is very important; we all have to advance. The faster the data transmission, the more agile the media; artificial intelligence allows us to make projections, models, hydrogeological models, geological models, and geotechnical models.

We all nourish from that, and it will give us security, especially in an issue that is fundamental for this industry, to avoid events that give a negative impression of the sector. You can work very well, a single event occurs, and you know that’s when there will be national relevance. That single event already brings negative attention, doesn’t it, to the industry? So, be aware that a company speaks for the whole sector. So, please, let’s appropriately use technology, and it is excellent. Let’s apply it. ANLA is committed to that, we want you to learn that you can always go and see our monitoring center, and our databases, always.

You know that we have modernized a lot, we hold our meetings virtually to save you what? Costs. We no longer ask you to come to us from your headquarters. We do the oral meetings and the follow-up administrative acts virtually. But whenever you want any face-to-face meeting, you are welcome to come to our facilities. If we talk to each other, we understand each other. And I wanted to take a minute to come back to something that César said, which I thought was fundamental. And I agree, the best CO2 recycler factory and taster is the trees. That’s the reason for the environmental compensation; that is why it is logical that the compensation starts as it should.

From the moment the environmental license is issued, you are required to have a compensation plan. Look, we now have cases of companies that drilled, did not find oil, or for x or y reason at the time, public order or something like that, they decided to close operations. 10 years, 15 years, and 20 years later, they have not made the environmental compensation. They even closed their trading house and their Colombian branch, and they want to leave that environmental debt with the country. This speaks very badly of the sector. Look, the communities are asking for this.

They often do not know that if you cut down a tree, you have to pay 5 or 10, depending on the species. They don’t know the important biological corridors that are being generated because now we are looking for eco-connectivity, especially for mammals: tiger cats, leopards, jaguars, and pumas; pumas have been seen again in our areas. A video that was sent to us in the Topocoro reservoir, which is the one in Hidrosogamoso, really caught my attention. A puma swimming. So we are seeing fauna again that we hadn’t seen for many years. Why? Because the authority seeks that these compensations are located in the best sector. But please, environmental responsibility is also about that. It is not only about “Oh, I use clean technology, try to recycle.” No, it is a very important environmental commitment.

Finance Colombia: Of course. Here in Colombia, as you well know, you have something special. In this country, one thing that I love is that a person could spend their life here and still not see all the natural wonders. From the Amazon rainforest, to. I went to Nevado del Ruiz, there in Manizales, now it is rough, but before, when you could go up, it was like another planet. And so many things. Or you are in the Tatacoa desert, or I went to the Guajira one. And it is important to protect that. I don’t think there is anyone who doesn’t believe that. Well, yes, some criminals are destroying with mercury, like in illegal mining and those things. But there are also responsible companies.

One thing I have seen in the mining sector is that there are some companies, well, there are some bad ones, but some very responsible companies, not just on the environmental aspects, but also the social ones. When they arrive in a town and before starting anything, they look at what they need there, and they talk to the local NGOs there. And like they do social and educational programs and things like that. I hope we have time for a couple of questions. I don’t want just us to be talking. I hope this can be interactive. Does anybody have any questions for the panel? For them, they’re the experts, not me.

Well, I have a question for you guys, so I want to ask, well, the same issue, but how can the need to increase oil production be balanced with climate and environmental sustainability commitments? It’s broad, but what are some ideas for that balance?

Gisela Cardozo: You start, César.

César Zárate: I agree with Gisela. The environmental issue is critical for the country. It is simple to comply with the requirements. But that increase in production will only happen if a suitable environment is found. The communities, so that they don’t oppose, I don’t know, these are ideas that we all throw in the air, “Plant a seed.” Because the communities don’t like to be scolded. The royalties come from the central government, and we see where they are going. Just open the newspaper, and we know where our money is going. Why not let the communities manage a part of it, the municipalities? So that in the industry,y they see a friend, not an enemy. And that fact alone, that they open the doors for us, in compliance with environmental requirements, makes a much better climate flourish. The oil is there.

If you notice, all the formations from Colombia, from Ecuador, even, we are talking about Northeast 22 degrees. It is there. If we explore, we are going to find it all there. From Putumayo, passing Cali, Magdalena Medio, upwards, Catatumbo, and obviously Venezuela, and this part of Casanare, yes? Everything. Just past Venezuela, that imaginary division we have as a country, it is possible that the largest oil reserve in the world is there. But it passes the line to Colombia, and they disappear.

A little further, Northeast 22 degrees, are the reserves of Guyana. There, they are fighting and killing each other over it. We are talking about unimaginable reserves of crude oil and gas that bring a lot of progress to a country, money that we need to lift 20 million people out of poverty, right? But everythingis  in that balance. Exploration, production, communities, and environmental compliance.

That balance is very complex. Because speaking of NGOs, I’ll steal a minute, the American NGOs, the Norwegian NGOs, and the Nordic European ones come and tell the indigenous people of the area that the oil companies are taking away the blood of the Earth, of the Pachamama, etc.; the indigenous people oppose. But in northern Europe, those same NGOs say nothing about the production of crude oil in the North Sea. So we produce less oil, and they keep prices high. And who wins? That is why we are the ones who must provide the solution as a country. In that delicate balance that must be in place so that everyone in that chain is well off. The investor, the community, and the environmental side. And the money that must flow to continue investing in education and lift poverty.

I think it is that very delicate balance. And put a large part of that money into research of all kinds of alternative energies. That is the priority.

Gisela Cardozo: Yes, and I would also think that, if we consider what we have at the moment, of course, the sector can try to manage with the State this type of changes in taxation, in benefits. But that is something more in the long term, right? Let’s talk about what we have now and what they can do. You said it, Loren said it; at this moment, what is lowering the hydrocarbon production, simply? The social conflict, the social blockades, and all of this is what we have been talking about. I think the companies can manage it with good social relations. We, as an authority, experience it. Sometimes a company arrives and let’s say they are going to open a well that, yes, they already had it authorized, they have the license, they have the permit, it is within their zoning, but they had thought about it in their plans for three years from now. When they went to that community three years ago, they said, “Oh, done, here, such and such.” And the community, “Ah, well, yes, we know,” and so on. In three years, those people who live there will no longer be the same.

Or there are more already, but the company doesn’t put in the work. How hard is it to hire some professionals, please, who know how to manage communities? And before the community sees the drill coming, and sees all the people raising dust, making noise, putting out emissions. Environmental management is not a big investment, but please, the advances should always be on this level. We have seen that the communities are receptive, there are communities and communities, I agree. Some are also manipulated, but that should also be perceived by their relations group. From what side do we approach them?

There are some we can talk to, and there are some we cannot. Let’s reach out to the most reasonable people, have friends there, and listen to them. Sometimes it is simply a matter of having a post or giving them a channel where they can put their requests, petitions, complaints, requests, etcetera, etc., etcetera, etcetera. This social relationship, just from the social conflict in the country, a change in perspective towards the hydrocarbons sector? You are already going to improve production by at least 10%, I tell you.

The second point is that there is a law on science and technology in the country, on innovation, science, and technology, which allows you to be exempt from your taxes 100% of what you invest there. This gives you proximity with the academy and developments, developments that you can use in your operational part, and so on, and it gives you the proximity with the academy, so that the academy gets involved with the sector, feels more involved, and educates the generations it is already educating the way it should be. I don’t know if you know much about science and technology law, but it has some impressive tax benefits. Check them out and see that it is profitable, I would say, from what is available at the moment, right?

Finance Colombia: Yes, and I think, listening to the entire talk, it seems to me that the key is not to be, like, antagonists, like ‘The government versus the private sector.’

Gisela Cardozo: Let’s be synergistic.

Finance Colombia: That, that. And also, it’s very important to involve the town, the people. Like, everyone here is from within the industry, so you already understand what the sector is like and the importance of oil. But some people haven’t thought much about that, and public opinion is very easily swayed by a controversial article or something like that, or when a tragedy or an accident happens. However, it is like in the airlines, that 10,000 days can go by with nothing happening. But when there is a first accident, everybody is afraid to fly, okay? But when they go in their car, where there are crashes, they can’t even leave the house without seeing a crash in Rio Negro. But people are like, I don’t know, it’s fascinating how the mind works.

So, the important thing is that we need to work together. It’s not that we always agree, like there’s always going to be disagreement on issues like what should, I don’t know, the government policy should be, or fracking or no fracking, or more drilling or not… But to not be enemies, but working; “Look, we have the same goal, we work together even when we disagree, we are civil and think more in the long term.” So this has been very fascinating for me to listen to the opinions of you, the experts. And well, so now I invite you to take half an hour, a break, here with coffee and everything. Ah, we have a question. I don’t know if we have time for a few moments. I hope so.

Marielita Miga: Hello, good afternoon. This is Marielita Legardes Miga, an oil and gas lawyer from the Mompos Oil Company. I have a question for the panel. All three of you have an interesting view of the country and outside of it. And it is that, as a lawyer, well, what I notice, which I believe may affect production a lot, at least the investment in the country, is excessive regulation. Of course, it is necessary to regulate this sector, to avoid the tragedies of the past, to be more and more strict in what the best practices of the hydrocarbon sector are, and to bring them to the economy. However, I believe that many times we sin by wanting to replicate models from other places, where perhaps here we do not have sufficient technology, and we have not yet reached a level of progress that allows us to make radical decisions.

For example, in the case of the non-conventional, non-conventional resources. So I would like to ask you to tell us a little bit ab is your vision of this regulation. And I do not mean for you to tell it to us as lawyers, independent of your profession; what do you think can be done about regulating, and regulating with more and more restrictions, a sector that needs wings to fly in innovation? Because we are one of the sectors with the most innovation, with the most resources to be able to, with science, as the doctor said, overcome uncertainties.

So, what strategies do you think can be taken? I mean from a point of view, beyond the legal aspect, if those roundtables could not only be work roundtables with the communities but also with those who make the decisions in the country, with those who generate the regulations. And how willing are they? That is where government policies come in, right? Because the executive is the government. The one who generates the regulation is the government; the laws are from congress, but our regulation comes from the ministries. So I wanted to ask you about that. So sorry if I went on too long.

Gisela Cardozo: Well, yes, indeed, I am not as strong legally as you said, but perhaps from my point of view, it does not seem to me that the current environmental regulation is very complex, or very complicated to comply with. It is clear. It has been updated on some issues where the very knowledge from them has led us to it. Because, especially on the topic of emissions, the regulation has been evolving, and it is restrictive in certain aspects, but it is not so much about that. I don’t know, I insist that the sector should be underpinned much more by the academy.

Because you know that regulations always go out for public consultation. At this moment, Decree 10-76 is in a revision process. It is made available to all to receive feedback, and such. In the same way, the ANH and the ANM have also recently put forward different regulations for discussion. If you look, what do you see is of deep relevance in the country? The opinion is also of the scientific experts, of the experts from the universities. They move the thinking of our youth, of those who take to the streets to protest or support, they are the ones who convince them even. Their teachers, in the sense of the guru of an environmental issue, are the super-experts in something.

And they are the ones who give the most opinions when regulations are put out and such. Most of the comments come from experts from the universities because they are also the ones who provide the best basis for their comments. I would say that there should be more interaction between the sector and these academic groups. If they understand better… because it is very different to have a professor in the theoretical field at the university than for them to experience the reality with you, to go and get to know what it is, and apply their knowledge there.

I mean, science must be applied to become technology, to become innovation. But I see a lot of this distancing. The Academy is over there at their desks, in their laboratories, but not as a pilot plant, but very isolated. So, when they give their opinion on regulations, they are very theoretical. So we want to have Norwegian regulations, we want to have something that is not in our context, not our environment, and that is why we make mistakes that have been made in the environmental area. As you know, 30, 40 years ago, the very corporations and the nation said, “We are going to reforest with eucalyptus and pine.” Because they are the ones that successfully reproduce the fastest, right?

And what did we see, “Let’s harvest trout in our rivers,” and the intentions were very good, but it is this detachment, let’s say, in the regulations. We contribute from the authority, we have very competent people who have worked with you many times. Sometimes they move from one sector to another, and that is good because they get to know the sector, which lets us work as you said, in synergy. Let’s work together. When those norms go out for consultation, please also speak out, but in a well-founded manner, get your opinion, and give it. I do think that you are being listened to. I believe that society, the Colombian authorities, has usually been very democratic; they have listened. Let’s keep trusting that this will be so, let’s do our part.

Finance Colombia: Thank you. Well, that was very interesting, and thank you for the question. I felt bad, like “Ah, we’re boring people because nobody’s asking anything.” But that was very interesting. Thank you so much. If there’s anything else, we’ll be around to talk more about this. Thank you.

Gisela Cardozo: Thank you.

2021 also saw Viva rebrand and launch its new yellow + aquamarine image, and also bring its fleet up to 21 aircraft, including 10 latest generation Airbus A320neo high-efficiency aircraft sporting General Electric LEAP-1A high-bypass turbofan jet engines that reduce environmental impact while generating a saving of 20% in fuel consumption, reduction in up to 5,000 tons of CO₂ emissions, as well as diminishing cabin noise by 50%.

Viva also inaugurated José Maria Córdova International Airport in the Medellín suburb of Rionegro as its “HUB MEDELLÍN” Connection Center, facilitating the connection of more than 250,000 passengers so far in 2021.

Viva CEO Félix Antelo.

“2021 has undoubtedly been a very positive year for the company. We have been pioneers in safe reactivation, showing our passengers that it is possible to fly with all biosafety protocols to a wide network of routes, guaranteeing the punctuality of their flights and, above all, at low prices. The figures that we deliver today confirm the confidence and preference of Colombian travelers for Viva and its Super Low Cost model,” said Viva CEO Félix Antelo.

During a year-end rendering of accounts, the privately held airline indicated that during 2021 it managed to offer 12% more seats than in pre-pandemic 2019, and exceeding in the second half of 2021, monthly passenger traffic compared to pre-pandemic levels. Viva now dubs itself as ‘The king of the beaches’ with 18 routes to beach destinations and the largest number of seats available to Caribbean destinations such as San Andrés (49% market share), Santa Marta (44%) and Cartagena (35%).

Viva has also announced a commercial alliance with Tuya and Puntos Colombia, for the launch of the ‘Viva Card’, an branded charge card with access to credits and discounts on tickets. Viva bills itself as the first airline in the country certified with the ‘Certified Check In’ biosafety seal, as well as the ‘Biosecurity Operations’ granted by ICONTEC, and the ‘Safe Travel’ international seal. Viva states that to date, 95% of its staff are immunized against the coronavirus.

“Since our start of operations in 2012, at Viva we have transported more than 30 million travelers between Colombia and Peru, on an average of 217,000 flights. This has been possible thanks to a Super Low-Cost differential fare offer, as well as compliance with the highest standards of safety and punctuality on our flights, which, it should be noted, allowed us to ratify for the third consecutive year as the most punctual airline in Colombia and one of the most important airlines in Latin America, having a 90% compliance as a holding company. Punctuality is and will continue to be an obsession for Viva,” added Antelo.

Over the past year, the non-profit affiliate, the Viva Foundation benefited more than 27,500 people in Colombia and Peru, investing more than $500,000 USD in projects and programs that benefit vulnerable populations through activities such as the transport of 35 tons of items such as prosthetics by the Humanos 3D Foundation, school kits, books and humanitarian aid.

GE Digital’s Flight Analytics platform helps airline operators, managers and pilots improve flight safety with multi-system flight data collection and analytics to help optimize operating procedures and overall airline safety. Data from the system can improve safety and reduce carbon emissions. With fully automated data quality checks and error correction, airlines get better insight faster with less human intervention. And the solution takes safety a step further by including fuel efficiency analytics to help operators fly both safely and efficiently, identifying savings opportunities and quantifying the results. Viva will be the first low-cost carrier in Colombia to utilize flight analytics in their operations.

“Viva is one of the fastest growing airlines in Colombia and South America,” said Felix Antelo, President and CEO from Viva Air. “This year, we have added 14 out of 50 new aircraft flying more than 3,100 flights per month. Our mission is to deliver a consistent and accessible service to customers, promoting a low-cost model in the region with sustainability and efficiency. These software solutions will allow us to fulfill that mission.”

Above photo: José Kling (l), VP of sales for Latin America for GE Aviation & Feliz Antelo, CEO of Viva Air (r). (Photo: Loren Moss)

Fuel Insight is a cost and emissions reduction solution that works by understanding real data from your aircraft and airline. Fuel Insight utilizes our powerful aviation data and analytics platform to merge flight data with flight plans and uncover valuable insight to help increase aircraft fuel efficiency and reduce waste. Fuel Insight gives operators actionable intelligence at multiple levels allowing analysts to drill down from macro trends to understand issues on a per-flight level.

Having one of the youngest fleets in the region, providing pilots access to data from across the operation is critical. FlightPulse is a fully configurable modular Electronic Flight Bag (EFB) application that puts data key to operational decisions directly in the hands of pilots. Designed by pilots, for pilots, FlightPulse provides access to aggregated data for more informed fuel decisions and departure briefings, as well as secure access to data from a pilot’s individual flight history, allowing them to analyze their own operation of the aircraft and self-discover areas to optimize operations and efficiency.

“Sustainability is core to the future of the aviation industry,” said Andrew Coleman, General Manager of GE Digital’s Aviation Software business. “Data and analytics provide a roadmap for airlines to evaluate interactions between operational systems to maximize sustainability. We are proud to work with Viva Air to further their goals, and the goals of the industry, in the region.”

The ferrules have an average diameter of 7 meters by 4 meters in length, weigh 7 tons and they are the first power generation components installed in the powerhouse construction project.

The pieces were again manufactured in the city of Taubaté, in the state of Sao Paulo, Brazil, by a subsidiary of General Electric (GE).

GE was awarded the contract to supply turbines, generators and associated equipment for the project in 2012, following an international tender carried out by EPM. After manufacturing, the units had to be shipped from Santos, Brazil to Colombian ports in the Caribbean, then deployed over roads as oversized cargo to the rural site of the Hidroituango hydroelectric dam in northern Antioquia.

Pending deliveries include power cable reels, bridge cranes and power transformers, and many other components. For energy generation, progress is being made in the construction and recovery of the underground plant with 2,400 MW of installed capacity and a projected 13,930 GWh of annual average energy. The powerhouse will contain 8 Francis turbines with a capacity of 300 MW each. Once complete, Hidroituango is expected to will supply 17% of Colombia’s national electrical energy consumption.

The low-cost carrier that flies an all-Airbus fleet has not canceled its planned deliveries of new planes on the way, equipped with highly efficient General Electric turbofan engines. The airline has new international and domestic routes in the pipeline and has not laid off any of its 800 employees (though 70% of them have taken voluntary temporary leaves of absence).

Colombian airline Viva Air is now carrying humanitarian aid in empty passenger seats as well as cargo holds of its aircraft to supply food and school supplies to famine-stricken La Guajira, Colombia

The airline has asked for a $60 million USD bridge loan from the Colombian government, roughly half the cost of a new Airbus A320 aircraft to assist with liquidity, and insists it does not need a “bailout.” Unlike Panamá based publicly traded Copa  Airlines (NYSE: CPA) which raised money in capital markets, Viva Air is still a private company backed by Irelandia Aviation, the same low-cost pioneer behind Europe’s Ryanair and Allegiant Airlines in the US. Legally named Fast Colombia S.A.S., Viva air actually is a Colombian company, while competitor LATAM (NYSE:LTM, IPSA: LTM) is Chilean and even Avianca is legally domiciled in Panamá as it goes through bankruptcy procedures in the US, home of its controlling shareholder United Airlines (NASDAQ: UAL).

Finance Colombia’s executive editor Loren Moss was able to catch up with Viva Air’s CEO for an update on the airline’s plans and status during Colombia’s national curfew, and to present the question countless Finance Colombia readers have asked: “When will the skies open to travel again?” The exclusive in-depth interview follows:

Finance Colombia: Thank you for your time. I know that you are extremely busy. I saw that for example, today you published on LinkedIn an open letter to the passenger public, because everyone is still asking when we return to the air. I do know Copa Airlines in Panamá said: “that they think that by June they are going to fly,” but, what do you think about that?

Felix Antelo: Loren with dates, we are, as a group of airlines, through ATAC (Association of Colombian Air Transport), we are talking with the Ministry of Transportation and with Aerocivil, about restarting operations, always talking about national domestic operations. It takes a lot more for the international operations. So, for national operations, what is being talked about without any definite or fixed date is June, the beginning of June, but there’s where complexities appear. Once we start we are not going to be able to fly through all the airports, we are going to be able to fly to 5 or 6 airports that are the largest ones, most likely, there are going to be hourly operational restrictions, so when you could normally fly in an airport 30 or 40 times per hour, we will operate between 5 and 6 times, obviously there is the whole issue of biosafety protocols that we are discussing, which is going to happen; the issue of an empty middle seat, then all of that adds complexity Loren, and also the biggest situation: the country situation with the pandemic.

“YES in capital letters! We are going to be able to expand our service on international routes and domestic routes and why? Because we have the most efficient structure, the most efficient aircraft operating in Colombia…”-Viva Air CEO Felix Antelo

Colombia so far has tried to control it and they have done a good job, but it all depends on when the country is ready and the government wants to reopen the country, all that obviously adds complexity to establishing a fixed date. And I also add Loren, that the airlines need at least three weeks to go out to promote and sell the capacity we have to sell. I mean, then they can’t tell me on May 28 or May 30 they begin to fly on June 1, we need some time to be clear about which itineraries we publish and which itineraries we are going to sell. So I am, sorry I can’t answer your question with something more specific, but I estimate that it will be June sometime and until that moment we are waiting for the authority to say when we can do it.

Finance Colombia: I understand, and aviation is always a sector with a lot of competition, with very small margins, but you are in the process if I understand well, of negotiating with the government, possibly a bridge loan of up to $60 million dollars and that is a very small amount. For example, Copa just issued short term bonds for $350 million dollars in the private markets. I understand it is a bigger airline; the other airline here in Colombia is in need of billions of dollars, so my question is: $60 million? Does that demonstrate your strength? Because, that’s relatively small, that would be enough for you to endure this pandemic, this recession that we are facing?

Félix: It’s a good point Loren, and indeed if you look at other companies as well, , in the conversations we’re having, it is a bridge loan as you well mention, of less than $60 million dollars, I mean in the market it’s being said that Colombian airlines need between $1 and $1.2 billion dollars, right?. In the case of Viva Air, as I mentioned in (Colombian business daily) La Republica, it’s less than 5% of that total amount, an amount close to $50 million dollars, it is a low amount for aviation, but for commercial aviation, like you, you are a person who the understands the market, you know that this is a very small amount, very reasonable for a government, it is an amount that for Viva, with the cost structure that we have, effectively helps us to go through this pandemic and get ahead, which is what we need.

Finance Colombia: Yes.

Felix Antelo: We entered this crisis with in a good way, let’s say a good first quarter until March 20, with a profitable position, the costs are very controlled as you know, and indeed it is an amount that sounds very reasonable for the state and that  satisfies the needs that Viva has and meets the needs that Viva has to survive and to continue growing in the future.

Finance Colombia: But that’s even less than just half the cost of a single Airbus aircraft that you fly.

Felix Antelo: Yes, it is.

Finance Colombia: We can see the drama happening around the globe even before the crisis like the struggles of Avianca or South African Airways, even before the Coronavirus COVID-19 Pandemic they were already in a bad state…speaking of which, nobody hopes for misfortune upon their competition but what opportunities are there for Viva? Will there be opportunities for those airlines that are in a growth stage such as Viva? Will VIVA be able to take advantage of, or serve any excess demand here in Colombia or in the broader region for example more routes between Colombia and Peru?

Felix Antelo: The short answer Loren is “YES” in capital letters! We are going to be able to expand our service on international routes and domestic routes and why? Because we have the most efficient structure, the most efficient aircraft operating in Colombia is the Airbus A320. It also has a very efficient configuration due to the number of seats we have and, as you well know, they consume less fuel, they have more reliability, they fly more hours (between maintenance), so for the unit cost of Viva the answer is: We do believe that there are going to be more opportunities in the market and business opportunities as well because the market is going to be reconfigured, and we have to be vigilant and agile to take advantage of those market opportunities, and as I repeat, it is going to involve national and international routes too, so that’s what I predict.

Good things to come

Finance Colombia: I know that you were already about to launch new routes in places like the United States, the Caribbean and Ecuador, but do you still have these plans or did you have to postpone that for months or years? What is the status of those new routes?

Felix Antelo: Well, indeed, as you mentioned, we were days, days literally, not even weeks of announcing and luckily we were able to adjust our plans before announcing, but the answer is Loren, that the plans have not been canceled, they have been postponed. I would tell you that we think of retaking those plans, but it will depend a lot on how demand evolves, surely it will not be a launch with four routes at the same time, but rather it will be somewhat more phased in, with some routes launched before others, and also seeing a lot of how international demand is evolving. What we are seeing around the world is that domestic traffic will be the first to fly for various reasons, and the people feel safer flying inside their own country.

Second because people also feel, from the issue of feeling close to home, being covered by a health plan, a third issue the cost system is cheaper to fly domestic flights than international ones; due to these factors the first traffic that will fly will be domestic traffic so seeing how the domestic scenario will evolve first and then the international one…we are going to take these international routes, but I would say that it will surely be, let’s say from the original date of when they were going to fly that we were going to start flying them from July to September of this year. On average, everything will be shifted I would say between 9 and 12 months.

Viva Air CEO Felix Antelo welcomes passengers on the airline’s inaugural flight from Medellín to Cali

Finance Colombia: You will be pleased to know that the number one question I have from the readers of Finance Colombia is “when can we fly to Colombia?” So many people: executives, tourists, yes, I see the demand.

Felix Antelo: International or domestic flights?

Finance Colombia: Internationals, there are people who, even tourists, who have unfinished business, deals to do here. There are people who have pending matters, meetings, or private matters, but the demand is there contrary to what a lot of people fear. I think that there are many who say that there is no demand but people need to see family, to do business. I hear from them.

Felix Antelo: Hopefully. I hope Loren, I hope you are right and that demand is stronger than we all anticipate, I would tell you that international flights—and this is not a formal or official date, my estimate is that they will be for Colombia I would tell you between the end of July and the end of August, it will be around that time. I hope I am wrong and it is sooner, but I estimate that it will be for the end of July or between July and another time in August.

Finance Colombia: With Avianca’s departure in Peru, is Viva’s strategy changing or how are things going there in Peru?

Felix Antelo: Look Loren, Avianca had shrunk a lot in Peru, especially from the year 2000, let’s say until the middle of 2018 and the beginning of 2019 It had been left with only one route to Cuzco with two or three flights daily. Viva had five flights daily. Avianca had already shrunk in the domestic market, and they had practically disappeared in late 2018 and early 2019, so in that sense it does not change much, and the other thing Loren, it is like what happens with the international routes that Avianca flew directly with its Peruvian subsidiary? if those routes were Miami, Buenos Aires, Bolivia, Brazil, it’s not yet clear how it is, so I believe that other opportunities may also arise in the international routes, but it is not clear yet Loren, I would tell you that in the domestic there will be no changes since Avianca was practically no longer flying domestic routes. On international routes there may be new opportunities, but it is not yet clear how that market will evolve.

Finance Colombia: Viva is based here in Medellín at José María Córdova International Airport outside the city in Rionegro. Bogotá has been a victim of its own success and El Dorado International Airport is super-congested and out of capacity. Viva is in growth mode. Can Medellin with its very small international airport (less than 20 gates) still serve your needs as a home-base hub into the future?

Félix: Well that’s a good question, the Rionegro Airport, let’s say it is a good airport, but surely given the growth of Viva, what we estimate for the future…this Pandemic obviously changes all, because traffic is going to be reduced strongly in the first stage, but when it returns to normal and we return to the Pre-COVID levels, if you are talking to the Rionegro airport for an expansion of a first stage of the part of the growth that will have to come, I’d say it would have to happen within the next two or three years so that Medellin does not collapse like Bogotá, we were in those conversations before COVID hit, so I told you now the time, I think that in the next 12 months the traffic is going to have a decrease now, I believe that at the end of this year it is going to start to recover stronger, so this kind of moves everything and delays between one or two years; it delays everything, which gives us a little more time, but going to your point, we have to work together between Viva, the (municipal) airport of Medellin, the Airport of Rionegro and the cities of Medellín and Rionegro to have an airport at the level of (international) expectations that is needed. If we want to continue increasing passenger levels for the next 5 to 10 years within 20 or 30% per year, the greatest growth of that will not all be in Medellin because you know, we operate in many other airports, but if our main base is here and the main airport for Viva is Medellin in Rionegro, then we need the airport to join us in this expansion plan.

Finance Colombia: Yes that fascinates me because they finished, they just finished this growth project, the good thing is that it shows the vitality and energy of the city, Medellin is a city that is progressing, which is increasingly in demand in the area, one thing that fascinates me about the airport is that I was talking to my wife the other day and I reminded her: “You know that it costs more to go from Medellin to Rio Negro in the taxi than the cost of the flight with Viva Air? I pay more for the white cars (dedicated airport taxis) than I pay for VIVA and it fascinates me!

Felix Antelo: Another thing Loren, a thought: either the taxi is very expensive or the ticket is very cheap.

Finance Colombia: (Laughs)

Felix Antelo: Either one, the truth is that the taxi is expensive, and our tickets are very accessible too, they have very low prices.

Finance Colombia: I remember how six years ago I paid about $70,000 pesos for an overnight bus from the north bus terminal of Medellín to Bogotá, but VIVA costs less than the bus and if I am concerned about my health, I can spend 30 minutes on a plane or 12 hours on a bus and buses do not have HEPA filters!

Felix Antelo: Yes that too, exactly then Loren, a final reflection of mine that you just told me, there are few closed spaces safer and healthier than inside a plane, so you just said, you are talking about a modern plane, an A320 plane, HEPA filters keep 99.9% of the air constantly cleaned, free of bacteria and particles, there must be few more closed places, I do not know any place, after being outdoors, that is safer than a plane.

See Also: What might happen to Avianca? Will Copa purchase the Airline? (click)

Here are excerpts of their conversation.

The Singularity U Colombia 2020 Summit takes place August 18 & 19. For More information click here.

Finance Colombia: So, I am here with Duleesha Kulasooriya. You are Deloitte’s executive director for their Center for the Edge. What is that?

Duleesha Kulasooriya: We are a small group within Deloitte, it´s based at San Francisco and Silicon Valley, we have another unit in Amsterdam another in Melbourne, (and now one in Singapore). We look at how the world is changing and why it matters and what you do about that, and if you ask a consulting colleague what drives their behavior, they will tell you it is whatever keeps their clients up at night. Our mandate is slightly different, our mandate is what should be keeping clients up at night and how do you bring that to the table. So, we look five to ten years out, we frame the perspectives in a way that you can understand it, and then, not only do we frame the future in a way that you can understand it, we say, well, given that, what do we do about it today? We do three things. We do research, we write papers, we do the research to kind of understand and frame, so we write papers about it, we do eminence, speaking like this and we also do advisory with a selection of clients, we work with them to help with their own transformation.

Finance Colombia: That´s interesting, because, you know, I think of Deloitte coming from a finance background, I think of Deloitte as an audit, and large company accountant basically, but it´s interesting because we see companies like Deloitte, and the traditional Big Four have been evolving, then we also see companies, I am reading a book right now by Bill Mattasoni and when his time met at McKinsey and also BCG and its fascinating because his focus was marketing, he kind of pulled them away from traditional strategy into a different area, and so now, how important is it for companies, even if you go as a consulting you tell, for example General Electric how to reinvent itself, but you guys as a company that has been known 20 or 30 years ago, Deloitte, ok, they do my audit as a publicly traded company or they do our taxes for a multinational, but here we are talking about innovation and ways to disrupt and ways to see the future. How does that fit into the core DNA of a company like Deloitte?

Duleesha Kulasooriya: It´s a very common misconception that we are still an audit and tax firm, those are our roots, it started as an audit firm more than 100 years ago, and in most geographies that’s still what we are commonly known for. Now, in the US, in Europe and Australia, our consultants…at this point, consulting makes more money than all the other businesses combined, so it´s very dominant, and beyond consulting, we have many other edges like The Center for the Edge, we have a practice in blockchain, we have a practice on the future of work, all these different edges that are relevant to everything here at the Singularity Summit. I mean our partnership with Singularity University itself, is an example of that where the other guys aren’t. So, we recognize that we too need to evolve, and a big part of the evolution is kind of pushing the boundary, pushing the edge from where it is and I think the marketplace is coming to realize that Deloitte is more than an audit firm. I think for Colombia we had to do something like this, for them to say “wow, I didn’t know you guys did that!”

Finance Colombia: That´s interesting and especially in a place like Colombia, I don’t know how familiar you are with the country…

Duleesha Kulasooriya: Not enough unfortunately. It´s my first time here, I have been reading a lot before I came, this Orange economy thing is very interesting and I´ve done very relevant work for that in the US but I am learning more about that.

Finance Colombia: I live in Medellin and Medellin works very hard to position itself or has the aspiration to be like the Silicon Valley of South America. And it’s fascinating because you have San José California and then you have San Jose Costa Rica that also has had a lot of success, and so Medellin is really trying to be the new version, there are a lot of fascinating things happening…

Duleesha Kulasooriya: Santiago de Chile has also done really well in some of those aspects.

Finance Colombia: You spoke about how a lot of companies or too many people traditionally depend on the resume or old traditional qualifications and I think that that is fascinating, especially in Colombia, if you spend time here you will see it is a very traditional country.

Duleesha Kulasooriya:I spoke at Deloitte Colombia yesterday and I was the only male not wearing a tie. And I was definitely the only person with a mohawk! Well I am the only partner at Deloitte with a Mohawk.

Finance Colombia: Especially in Bogota. It would be very hard for a nonconformist to come up through the ranks in a place like Colombia, many times you will go to some talk and you will see introductions and the speaker will spend five minutes reading about what university the speaker went to 30 years ago and what they did and all this…

Duleesha Kulasooriya: It´s a qualification for you up there…

Finance Colombia: While back in the states on the other hand, you might see somebody who is a great programmer for example: “Well how did you learn Python?” “Oh, I taught myself”…We´ve got a friend visiting right now in Medellin, I had to leave him to come here, but he has been a CTO, he lives in California, and he has been a CTO for several companies that have been clients of ours, and his whole career has been in IT and software, but his degree is in music, and it would be extremely difficult for somebody to do that here in Colombia. I think that as they can shake that they can accelerate, and you see that need for…

Duleesha Kulasooriya: Absolutely. So, in all of these places, either we break the culture or not, so, that is no different from what I am talking about in an organization and having to do something different, and having the conviction and the courage to do something different. Once you find one or two examples, if you shine the spotlight on them, then more people feel you have permission to try something as well. The reason I have this mohawk (haircut) is kind of for that reason, there´s a festival called Burning Man, actually in the next building they have a whole lot of….

Finance Colombia: A lot of people here know about Burning Man, I´ve got a friend from Cartagena who goes to Burning Man every year.

Duleesha Kulasooriya: Yes, I go to Burning Man every year, and I shaved a mohawk for the festival because that is what I wanted to do, I could be myself and be that for that week. So, I come back, shave it back, go bald, it’s hair, right? Not a big deal. One year, I kept a little longer than that, and this lady walked up to me and said thank you, and I said for what, and she said, well, I don’t know if you noticed, I am wearing a snow string. I don’t, it´s a tiny little thing, and she said, well I take it off during the week and only wear it on the weekend, because I didn’t think it was appropriate then I saw you walking around with a mohawk and it made feel okay to bring my whole self out to work.

So, what I realized was that inadvertently I had created a space of permission, where others can be themselves. so, I kind of took that to the next level, so, even, I have an office, but I don’t sit in the office, I sit in the bullpen with all of the younger colleagues so that I can also learn from them and then can learn from us, and I am also in their day to day so that we can interact more, and we can have a normal conversation, so we can actually talk about it, and there is not like a hierarchy. I go to work in a hoodie, I go to work in jeans and a hoodie, because we always had this thing of “dress to the level of a client.” Well, what do you think people at Facebook and Google and all the startups wear? They are not wearing suits and ties, it´s a different world, right? You realize that stuff is very superficial, it´s not what matters.

So, what you need in Colombia, and it will happen over time, are more examples of people who are doing things differently, you will need that startup, Rappi or something else, that suddenly begins: Oh! So, I don’t have to go join a large corporation, I can do this and be successful too. You need someone who is kind of flamboyant in some way to show a case and be successful. You need alternate models to succeed in order for others to have permission to do so as well.

Finance Colombia: We look at scale and one of the things you talked about, disrupting at the edge, that reminded me of the book “The Innovators Dilemma” which is a very popular book in Silicon Valley, and there are cases of companies that are very large for example, General Electric, IBM, Kodak, and what happens is that sometimes there are business reasons why the cant necessarily bet the whole company on something, maybe the right thing is to disrupt yourself, eat your children, and it´s fascinating because I wonder how that can apply to countries that are medium size economies like Colombia that just entered the OECD and are advancing, the basic infrastructure is here such as fiber optic, and 4G and all that stuff, but still in many ways they are playing catch-up. How can they leverage those concepts to be able to either leapfrog or to grow more quickly?

Duleesha Kulasooriya: So, a few things. One, you do need the technological infrastructure, if you are saying that is already there, that is great, because that gives everyone access and the ability to take part of the digital economy. That’s the first one.

To continue reading, click here

The LEAP family of jet turbofans claims a 15% improvement in fuel consumption, compared to current generation passenger jet engines, while maintaining the same level of dispatch reliability and life-cycle maintenance costs. (click to enlarge)

The LEAP-1A engine order for the 35 new A320neo aircraft, will begin delivery in 2020, and the sale integrates a 12-year agreement with CFM’s International service unit for the maintenance of the engines. LEAP-1A engines are products of Cincinnati, Ohio based CFM International, a joint venture between US based General Electric and French manufacturer Safran Aircraft Engines. Safran produces the turbofans and “cold” parts of the engine, while General Electric (GE) provides the combustion unit and high-temperature components. As of February 2019, CFM reported a backlog of 17,275 orders and commitment for the LEAP jet engine family.

Above photo: José Kling (l), vice president of sales for Latin America and the Caribbean for GE Aviation finalizes the CFM jet deal with Feliz Antelo, CEO of Viva Air (r). Photo credit Loren Moss

“This is a historic day for the Viva Air Group, we are proud to announce the partnership with CFM International. The LEAP-1A engines are the best option for our 35 new A320neo aircraft, bringing important savings in fuel and maintenance for the company that will benefit our operation and mainly our passengers through more efficient operation and more affordable prices,” said Felix Antelo, president & CEO of Viva Air.

Chaker Chahrour, vice president and general manager of sales and marketing of CFM & GE Aviation

Chaker Chahrour, vice president and general manager of sales and marketing of CFM and sister company GE Aviation, commented how “wonderful it has been to be part of this dynamic team and see the growth of Viva Air in the last seven years. We greatly appreciate the trust placed in CFM after the signing of this agreement and we hope to continue strengthening our relationships in the coming years. We believe that the LEAP-1A engines will be a key element of Viva Air’s continued growth and a valuable asset in terms of fuel efficiency and maximization of the flight hours of the A320neo fleet. ”

Viva Air, an affiliate of Irelandia Aviation, operates domestic and international flights in more than 21 destinations in Colombia and Peru. During 2019 the carrier expects to transport more than 7.5 million passengers and is incorporating 50 new Airbus A320 aircraft to its operation.

Now, as the world market continues to evolve, so too is NEC. It is increasingly moving into services, with the Internet of Things and biometric technology taking on a central role in the company’s strategy.

Photo: Loren Moss of Finance Colombia (L) sits down to talk about NEC’s operations in Colombia and abroad with Kukita Shinya (R), the Japanese company’s chief engineer.

The Tokyo-based technology firm also has a large presence in Colombia. One of its biggest success stories is outfitting a football stadium in Medellín with face-recognition technology that has helped increase security during events.

To discuss this innovation and NEC’s other pioneering advancements, Loren Moss of Finance Colombia recently sat down with Kukita Shinya, the firm’s chief engineer. He explains NEC’s shifting business strategy, its work in the Internet of Things, and how biometrics is becoming an ever-larger factor in the financial services industry.

Finance Colombia: NEC now has less of a presence in consumer electronics and much more of a presence in industry and business. That probably was a strategic decision that the company took some time ago. But tell me, where does NEC fit in that whole universe?

Kukita Shinya: As a company, as you correctly mentioned, we are not doing home appliances anymore, and actually we are not doing the mobile handset anymore. We have started to focus on what we call the social solutions: at this moment, consumer products, industrial, and social.

In industrial and social, the boundary is a little ambiguous. For the international market, our strength at this moment is still on the telecom carrier market, including microwave transmissions, Netcracker OSS/BSS, submarine systems, and all the other components of infrastructure. But we say we focus on social solutions starting from our biometrics identification technologies, like fingerprints and facial recognition. The solutions applied to the stadium in Medellín are one example. That’s our story.

Finance Colombia: I know the Internet of Things is a big area now as well. What is NEC focusing on in terms of IoT?

Kukita Shinya: I categorize the IoT into three different parts: personal IoT, industrial IoT, and social IoT. Personal IoT is like wearables, wristbands, glass-wear, or home appliances. And then for industrial IoT — actually there are different types of industrial IoT — with the most famous one being the jet engine of General Electric. They monitor the status of their own products.

Finance Colombia: Right. The engines themselves are feeding back to the provider, to General Electric.

Kukita Shinya, chief engineer at NEC, explains how a stadium in Medellín is using NEC face-recognition technology to “pick out the hooligans.”

Kukita Shinya: Exactly. So that means the motivation is the manufacturer maintaining the relationship with customers for an extended period of time.

In the past, every manufacturer tried to do that, either with loyalty programs or membership or those kinds of things. But those are very weak. People can easily stop using those programs. But with IoT it’s wired — it’s connected — so it’s very strong.

Finance Colombia: There’s less “churn” in the relationship. It’s stickier. You’re buying a relationship with General Electric — not just a jet engine — and General Electric is going to make money over the lifetime of the service of the product versus just from having a one-time hardware sale. It’s brilliant.

Kukita Shinya: Exactly. And another type is very similar, where the monitor is attached to a moving object. It’s similar to the jet-engine case, but this one used by operators, for example, in a bus. They want to monitor the exact location of the bus to give better information to the passengers, and they can be used to monitor driving behavior, too.

Finance Colombia: So you know when the next one is coming? You see that on the trains in the subways. It says, “three minutes until the next one.”

Kukita Shinya: Yes. Another industrial IoT focus is the manufacturing process. “Industry 4.0.” Sometimes IoT means Industry 4.0, some people say, but Industry 4.0 is, more specifically, for manufacturers and, even more specifically, driven by the German government. So you know, we are participating in this industrial part as well.

They are using our unique technology, like the fingerprint of things or coordination programs among factories — not only within the factories but also across the factories, including raw material suppliers and distribution channels. End-to-end manufacturing.

But for us, the most significant IoT is social IoT. And this social IoT is almost a synonym for “Smart City,” with various sensors, networks, data analysis, and body codes on top. So this is very much a résumé of our recent focus on social solutions.

Finance Colombia: As an example, can you talk about what NEC has done, or what Medellín has done here in Colombia, using NEC technology? It’s all very innovative, especially what you all have been able to accomplish in the football, or soccer, stadium.

Kukita Shinya: With the face-recognition technologies, we have been working on this from scratch — from the research level, for over 20 years — and the speed and accuracy of our face recognition has been recognized as number-one technology by NIST, the National Institute of Standards and Technology.

Using this world-number-one technology, we can pick out the hooligans — or the bad actors — in the stadium through video imaging instead of needing the person stop at the still cameras. We can capture the face as the people are moving.

And similar technology can be applied to the “passway” between the plane and the airport building. In “the skybridge.” We can deploy the camera with the recognition systems so that we can capture the image crossing over the bridge before they reach the immigration office so that the officials can be well prepared.

Actually, that’s the technology we deployed in the press room at the Olympics in Rio just months ago. So they could go through security just with facial recognition.

Finance Colombia: Something that’s interesting is that the use of biometrics is different in different parts of the world. Different cultures have different expectations of privacy. In the U.S., we tend to be rebels and not like anything the government wants to do — just because the government said it. Here in Colombia, on the other hand, it’s very common to use biometrics. You go into a bank, you make a transaction with cash, and the bank takes your fingerprint. If somebody sends you money with a money transfer service, they take your fingerprint.  

What do you see in the future regarding the use of biometric technology? What are some of the innovations that will not just improve security but improve the customer experience when it comes to the banking and the financial sector?

Kukita Shinya: Absolutely. There are ongoing trials for proof-of-concept things that use only biometric information for retail shopping. Obviously that’s for convenience. People don’t have to carry their credit card or even their wallet. They can purchase things with their fingerprint.

Finance Colombia: I’m told that in Brazil you can go to an ATM and take out money just with your fingerprint.

Kukita Shinya: Yes. The different applications are under study right now. And a lot of it is about privacy and security versus convenience and the quality of experience. They are a trade-off in many cases. If you try to improve the convenience, you need to sacrifice some privacy or security. That’s the common saying. But we don’t want to compromise either one.

So privacy is an issue and — as you just rightly mentioned — that is quite different from country to country. Expectations exist, so we cannot apply a single global rule for these things. But our aim is to overcome these trade-offs. We’d like to achieve both, and we have to choose the correct method for each country.

“Copa is proud to sign this landmark order in the presence of our countries’ two presidents,” said Copa CEO Pedro Heilbron. “The Next-Generation 737 is the backbone for our fleet today, and our order for the 737 MAX shows our continued commitment to the future, to bring people together across all of the Americas using the most modern and efficient airplanes in the sky, as well as our Hub of the Americas in Panama City.”

PHOTO: US President Barack Obama and Panama’s President Juan Carlos Varela look on as (seated, l to r) David Joyce, President of GE  Aviation, Jim McNerney, CEO and Chairman of Boeing, Stanley Motta, Chairman of Copa Holdings, and Copa CEO Pedro Heilbron signed documents recognizing the agreement. (Courtesy Copa Airlines)

Boeing currently reports 2,715 737 MAX orders from 57 customers globally. This order had previously been listed as “unidentified” on Boeing’s Orders and Deliveries website.  Motta added that “with the 737 MAX our customers will enjoy all the benefits of the best technology available in the market. This order is an important step in strengthening Copa’s leadership in the region as we enhance our world-class product and expand our network. Similarly, we are very excited about bringing new opportunities for Panama’s economic growth in the process.”

Copa Airlines will phase out existing aircraft in its fleet, replacing them with the newer planes, and supporting the carrier’s plans for long term growth. Copa will be the first airline in the region to operate the 737 MAX-9 on long-distance South American routes. According to the carrier, the 737 MAX-9’s range and passenger configurations are well suited to Copa’s long-haul route network.

“It is an honor to be joined by Presidents Varela and Obama on this great day. All of us at Boeing are proud to partner with Copa as it works to remain one of the most progressive airlines in the world,” said McNerney. “Copa has a history of leading the way for Latin America’s aviation industry, and this order shows their dedication to continuous improvement in performance, customer satisfaction and efficiency.”

Boeing’s 737 MAX employs General Electric’s CFM International LEAP-1B engines, as well as redesigned winglets and other improvements to deliver increased efficiency in the single-aisle airliner market. Airlines operating the 737 MAX are expected to see a 14% improvement in fuel consumption over the most fuel-efficient single-aisle airplanes in the current market, and 20% better than the original Next-Generation 737s when they entered service. The 737 MAX-8 is projected to have an 8% operating cost per seat advantage over the competitive Airbus A320neo.

The 737 MAX series also features the new Boeing Sky Interior, which Copa has launched in Latin America on its Next-Generation 737 fleet. The interior features an upgraded cabin with more headroom and LED lighting that offers several color options.