For those passengers who have already purchased business class tickets, renamed to XL and XXL, if the aircraft has already had their business class seats removed, Avianca will assign them to the first three rows of the aircraft with the middle seat unavailable.

Now, upgrades, which Avianca will still give out as before, will mean the passenger gets to sit up front. So far, the airline has not announced any removal of business class on international flights.

Analysis

Avianca’s post-bankruptcy strategy seems to be to compete with emerging low-cost carriers like Viva, Spirit and Wingo by becoming one, rather than staying with a full service model such as Copa or Delta, attractive to business travelers.

The airline has already kicked out many of its most loyal fliers from its lounges, changed its redemption model to make it more expensive to attain elite status, and then United Airlines reduced lounge access for Star Alliance travelers including Copa and Avianca.  so the question becomes: “Why fly Avianca—an airline that once differentiated itself on service and comfort? An airline that defined itself a few years ago as something of a regional Emirates or Cathay Pacific of the Andes?”

It’s true that business-class domestic didn’t get the passenger much more on the flight itself. All flight segments within Colombia are less than two hours in length. No food was served on Avianca’s previous domestic business class. Passengers essentially got a bigger seat and priority boarding.

Domestic business class was still worth the cost for many frequent business travelers as status with Avianca and the Star Alliance once brought with it upgrades and lounge access the Star Alliance network. When Avianca began to have operational difficulties beginning with the 2017 pilot strike and its aftermath, Avianca would often find hotels for stranded Lifemiles elite passengers while leaving regular customers to sleep overnight on the airport floor.

Still, with business travelers, time is money. The most exquisite lounges in the world (which Avianca does not offer) cannot make up for canceled flights, missed meetings and connections, and unpredictability. Avianca’s previous management led by Germán Efromovich lost control of the company and a new team was brought in, but even months before the COVID pandemic hit, board chairman Roberto Kriete was caught on a leaked video calling Avianca “bankrupt” before the pandemic and flight groundings forced the airline into real, legal bankruptcy.

Most airlines that have tried to be all things to all people have failed. Panamá based Copa does own Colombia-based Wingo but manages it as a separate operation with its own infrastructure, management and marketing. Copa does very well as an all-international airline (with the exception of one domestic route to and from Davíd, Chiriquí), a serviceable—though overcrowded lounge in its Tocumen International Airport home base, and little direct pressure on its routes.

Avianca still flies a few trans-Atlantic flights after filing for bankruptcy, but for Latin American and Caribbean destinations, US travelers who want to stay in Star Alliance can connect to most destinations, even within Colombia through Copa, and Delta passengers now have Latam as a partner. Low-cost travelers, and even business travelers who aren’t beholden to a legacy network can choose from aggressive new low-cost carriers and connecting flights between Colombia and Florida in the US are under 4 hours—short flights where first and business class options are less important to the passenger.

Most airlines know they can’t be all things to all people, and don’t try to. Ryanair doesn’t try to be Emirates, and Spirit doesn’t try to be Delta. Automakers face the same challenge. Mercedes and BMW fared very poorly when they tried to launch economy low-end models. Toyota and Nissan set up separate operations, Lexus and Infiniti in order to move upmarket. The question here is: Is Avianca trying to be Wingo or Viva? It does not have the DNA of a low-cost carrier.

If Avianca wants to be a low-cost carrier, what is its value proposition to customers? Why fly Avianca instead of the real low-cost carriers? Lifemiles no longer gets passengers what they once did. The lower Avianca’s fares, the less Lifemiles the passenger collects (unlike before, when they were based primarily on miles flown), and now, unless passengers are flying on a 1^st or business class international ticket, Avianca & Copa status travelers can no longer benefit from many Star Alliance lounges.

In fact, independent lounges not run by an airline are becoming more popular. The Lounge Medellín operates in the José Maria Córdova international airport, open to any passengers that wish to pay admission or join lounge networks like Priority Pass. This option is trending as airline operated lounges have been restricting admission or tightening requirements to members of third-party networks like credit card perk programs or Priority Pass.

Can Avianca successfully reinvent itself as a low-cost carrier? Is there some other strategy that they are implementing? Removing business class from short haul commuter flights is not a big deal by itself. In fact, it makes a lot of sense. But what is Avianca’s strategy? What does the airline want to be, and more importantly, what kind of airline, if any at all, is it capable of being in the future?

The year-to-date total of 152,482 so far is also 2.9% below the number of registrations from January through August 2016, reported the organization. Despite that slight downturn, FENALCO still projects the year-long total in 2017 to be above the sum seen last year.

Chevrolet, the leading automotive brand in Colombia, accounted for 22.0% of the total in August. It was followed by Renault (20.3%), Nissan (8.8%), Kia (8.5%), and Mazda (7.6%). Together, these five leading brands represented 67.2% of the automobiles registered last month.

Compared to August 2016, Nissan showed the highest growth at 23.6%. Mazda was nearly steady (with 0.6% growth), while Renault (a drop of -2.1%), Chevrolet (-12.8%), and Kia (-20.6%) all had negative results.

Only Chevrolet had more vehicles registered in August than Renault, and the two companies combined to make up nearly half of all registrations in Colombia. (Photo credit: Jared Wade)

In terms of specific makes, the top five models registered so far this year in Colombia are Chevrolet Spark, Chevrolet Sail, Renault Sandero, Renault Logan, and Kia Picanto. The Sendero has seen the biggest improvement compared to its performance at this time last year, while the other four all showed declines in comparison to August 2016.

In terms of the types of vehicles registered, FENALCO divides the automobile industry in Colombia into various different categories: cars, utility vehicles, pickups, wagons, vans, freight cars, commercial cars, and taxis. Registrations for utility vehicles and pickups were the only categories that showed an increase in August. Utility vehicles recorded the largest growth in registrations, with a 7.8% uptick, while pickups increased their numbers by 5.0%.

Geographically, Bogotá continues to dominate the market. The capital contributed more than one-third (34.2%) of all registrations in August, while the next two largest Colombian cities, Medellín and Cali, accounted for 15.4% and 11.0%, respectively.

Bogotá and Medellín each showed a slight improvement, jumping 2.6% and 1.6% from the same month in 2016. Bucaramanga, the capital of the Santander department in eastern Colombia, had the biggest decline among large cities at -11.9%.

Automobiles were not the only transportation category to show disappointing numbers last number. Motorcycle buying has also been sluggish throughout 2017, with just 279,914 motos registered from January through the end of July. This is down 14.5% from the 327,613 registered from January through July in 2016.

The five most-registered brands of motorcycles this year in July were Bajaj, Yamaha, Honda, AKT, and Suzuki.

In particular, business travelers are worried about “being a target of insecurity in some countries,” said Octavio Bonilla, travel manager at Nissan Mexico, in an interview with Acan-EFE. For this reason, he stresses the need for more firms to provide the tools — both knowledge-based and technology-based — to ensure their safety during all business trips.

The auto executive, who will be a featured speaker at the upcoming ViajesCorp Americas 2017 conference in Panama City from April 26-27, stated that traveler safety issues could result “if there is a lack of control, if each traveler is not monitored through electronic systems, and due to deficiencies in corporate travel plans.”

Juan Restrepo, founding manager of Ito Corp. and also a speaker at ViajesCorp Americas 2017, believes that now is the time to increase the vigilance paid to these risks given the transformation the industry is undergoing. Restrepo told Acan-EFE that the Latin American travel industry is constantly undergoing changes, and this is allowing suppliers — such as hotels, airlines, and transport companies — to discover alternative ways to interact with the final consumer.

Modern industry companies must “completely rethink their strategy, which must be based on the behavior of the new consumer,” said Restrepo. He added that corporate travel managers and agencies must begin to incorporate the most valuable asset of the process — the traveler — into their services and strategic plans.

Ongoing discussion of these issues and potential solutions will take place when experts meet later this month in Panama. ViajesCorp Americas 2017, which has an academic approach, will also focus on innovation in mature markets, evolution in connectivity, trading services developments, and changes in the direct channel and in the new consumer.

Finance Colombia is a media sponsor of ViajesCorp Americas 2017