Alliances Between Legacy, Low-Cost Carriers to Become More CommonBy Antonio Gozain | Mon, 08/30/2021 - 18:10
The COVID-19 pandemic has challenged many paradigms in the aviation industry. Now, alliances between legacy and low-cost carriers could become common following the American Airlines-JetSmart partnership.
Some are industry insiders forecast that in the following years, this kind of alliances will become common but they will “require adjustments in the point of view from both airlines involved,” said William Franke, aerospace industry investor and Director General of Indigo Partners, one of the investment companies behind Volaris.
These adjustments are necessary so airlines can reach agreements that integrate each company’s business model. Other details that should be considered include routes, dates and on-board services. For instance, in the partnership mentioned earlier, Santiago based airline JetSmart will offer short and medium-haul flights within Chile and Argentina, while American Airlines will be doing the heavy lifting from those two countries to international destinations. Frequent passengers between the US and South America have travel needs beyond connecting with the main cities. “Those customers also need to fly within South America, including leisure destinations,” explains SimpleFlying, which expects a successful partnership between American Airlines and JetSmart.
“This investment on JetSmart will give our clients access to a larger network, lower fares and the best flight loyalty program,” said Vasu Raja, Chief Revenue Officer of American Airlines. His counterpart, Estuardo Ortiz, Director General of JetSmart, said that this partnership “will accelerate JetSmart’s path to becoming the leading ultra-low-cost airline in South America.
Alliances between legacy and low-cost airlines would arise out of necessity, said Franke, with legacy carriers struggling to compete in a cost-efficient basis in the short-haul routes market. Earlier this month, Emirates and Aeromar announced an interline partnership, which will connect those travelling from Texas to Mexico with Emirates’ global network via Mexico City, Barcelona and Dubai, as reported MBN. Low-cost airlines Viva Aerobus and Volaris are leading in share of passengers in Mexico’s domestic market, according to Statista.
The aerospace industry, expected by FEMIA to fully recover by 2024, aims to close 2021 with a considerable passenger increase. According to official data from the Ministry of Communications and Transport (SCT) and the Federal Agency of Civil Aviation (AFAC), “Mexican airlines flying locally saw a 57 percent increase in passengers from January-July 2021 compared to last year’s second semester.”
The pandemic did not only open the possibilities for alliances between legacy and low-cost carriers, it has also improved the relationships between suppliers, manufacturers and airlines, which were forced to close ranks to survive the worldwide crisis.