Luis Alvarado
Director General
AeroUnion
/
View from the Top

New Administration and Strong Development

Fri, 12/01/2017 - 17:57

Q: What strategies are you implementing as the new Director General of AeroUnion?

A: I was appointed General Director in May 2017. The company needed a short-term strategy with operational continuity as one of the main goals. AeroUnion’s human capital, low cost and high-profit business model and the needs of our customers served as pillars as we designed the management transition strategy.

In December 2016, the company had acquired two additional A300-600 aircraft. With more airplanes on hand we developed a commercial strategy that required increasing our operations from 2016 by approximately 20 percent. The market’s response has been outstanding and our numbers have seen similar growth in revenue. We expect to end 2017 with the best results AeroUnion has ever seen and have a positive outlook for 2018.

Q: How is the company working to meet sustainable growth objectives?

A: We are transitioning from a family-owned business model to a corporate business model. My intention is to maintain AeroUnion’s core as a low-cost cargo carrier with high profitability and to strengthen our presence in our current local markets while we look to increase our fleet utilization. We will focus on strengthening our presence where we currently operate. We will continue our strategy to increase our number of operations in those markets with the quality service we are known for.

We will also look at other riskcontrolled objectives when exploring new markets.

Q: What are AeroUnion’s priorities in terms of investment in its new sustainable growth plan? A: AeroUnion’s potential has been proven these past few months. We have increased our operations and have become more profitable. However, we have seen that there are some areas we need to strengthen, or in some cases develop, for our strategy to be sustainable in 2018. The company had a good balance before the growth strategy kicked in. Now that we have seen its potential, we must regain or redefine our new operational balance to ensure sustainability.

The pillars for sustainable growth include areas like safety, security, quality, technology and people. I would like to have a special focus on technology. In the past, AeroUnion overcame a lack of technology by providing specially personalized services to our customers. As we grow, we need to find ways in which technology can help us to do more with the same, without losing our special touch with customers.

Q: What are your plans regarding fleet management and aircraft acquisition?

A: We are looking at that. We have three Airbus A300- 200s, two A300-600s and two B767-200s. Having three different types of aircraft entails certain challenges regarding maintenance and administration, including the crew necessary to man the plane. Our goal is to simplify our operations and reduce the diversity of our fleet. The time frame for this will depend on the availability of new aircraft in the market and the investment we are willing to make in the short and medium terms. Having two different aircrafts is surely sustainable but three is no longer feasible.

Q: How do you expect time-slot management to improve with the inauguration of NAICM?

A: Managing time slots in the Mexico City International Airport is very complex. Each day, the airport receives national and international flights carrying both passengers and cargo, and for cargo airlines it is difficult to compete for time slots when passengers are waiting to disembark. AICM authorities are doing a good job in managing slots but capacity is simply not enough. We have experienced difficulties while trying to grow our operations and it is one of the main areas of opportunity for the Mexico City airport.

With NAICM, there will be considerable development opportunities and the country should bet on a long-term strategy to grow its aviation industry. In terms of cargo, the government must work together with the private sector to ensure the project is a success from its design to its implementation. It is my personal opinion that there are still opportunities to develop Mexican airport infrastructure to the standards of aviation hubs around the world.

Q: How will the NAFTA renegotiation impact your MexicoUS operations?

A: NAFTA is without a doubt one of the most important free-trade agreements in the world. An update is certainly in order but the conditions are tricky. The US president has openly stated that the agreement has not been favorable to the US and a negative outcome could have implications on our operations, albeit not significant. We are still confident that negotiations will lead to a better trade relationship. Furthermore, thanks to the uncertainty created by President’s Trump remarks, many customers are now looking to diversify their business into nontraditional destinations in Asia and other regions. Once a NAFTA compromise is reached, we expect customers to grow their operations between Mexico and the US while maintaining a strong focus on other regions.

Q: How is AeroUnion targeting the expanding opportunities in the Asian market?

A: AeroUnion offers an excellent connection point with Asian airlines through Los Angeles and Chicago, and we have inter-airline relationships with many players and general sales agents in several countries. For the moment, our strategy will be oriented toward being a strong connection point for Asian airlines that want to target the Mexican market from the US. We will not fly to Asia directly but we want to offer a very competitive product to Asia via Los Angeles with our inter-airline partners.

Q: What new relationships is AeroUnion establishing with national and international companies?

A: We have reached an agreement with CargoLogicAir that will allow us to target the European market, a previously unexplored region for AeroUnion. Even though these flights will be operated directly by CargoLogicAir, this relationship will diversify our current operations. That being said, we will always prioritize the flights we manage directly.

We also have an alliance with Avianca, which has invested in AeroUnion. In a joint strategy since December 2016, we started flights to Miami and that has opened the Merida market to us, creating opportunities to transport fish between these two cities. Having a plane in Miami also allows us to have charter operations to Central and South America and countries such as Costa Rica, Guatemala and Colombia