Aviation in South and Central America - Part 2

Season 1, Episode 15 | NOVEMBER 5TH , 2025

Fabricio: Colombia; Arturo: Perú and Chile; Nicolás Centro América

Welcome to Altitude. Fasten your seatbelts, we're about to take off. Let's talk about aviation Seriously. How are they? Good morning everyone. In Altitud we continue with our series of flights through the skies of Latin America. Today we are going to analyze three countries, or rather two countries in a region that move passenger flows in a very particular way within the region and of course, also between the region, the rest of the continent and Colombia, Peru and Central America. There are three stories, three complementary models and we feel that with the same challenge: How to continue flying higher in an increasingly competitive global environment? Join us in this second episode of the Aviation in Latin America series, where we analyze the evolution, opportunities and challenges. Fabricio will start with Colombia, I will talk about Peru and Nico will give us an overview of the industry in Central America.

We start with you Fabricio, what can you tell us about Colombia? How has the industry developed in this country? Please.

Thanks Arturo. Hello Nico, hello everyone. A pleasure to be with you again. I would like to start by giving a general context and talking about market trends in Colombia. It is a very relevant country in terms of its economy in Latin America, occupying fourth place measured by GDP and it is the third air market in passenger movement, only behind Brazil and Mexico. It is a country that has approximately 50 million inhabitants and a network of 70 civil airports, of which 11 are international and 15 are concessioned to private companies.

According to the Official Airline guides from 2000 to date, Colombia is the second market in Latin America, behind Panama, with the highest growth in the supply of airplane seats, averaging almost 6% annually. It is a country where 27 airlines operate with links to 28 countries. The last decade has been characterized by several key factors that have driven the development of Colombia, now as a true regional power in the aviation industry. It has a strengthened aeronautical authority, it has had a significant modernization of the airport infrastructure, there has been a strengthening of regional and international connectivity, ambitious goals for growth and strategically positioning Bogotá as the main hub in South America have been set, which I must say, today is already a reality. And the above, despite the fact that in recent years the economy has had its ups and downs.

The Colombian peso against the dollar, for example, has experienced significant fluctuations reflecting various economic and political factors, which has provided an important element of financial pressure that operators have had to overcome and has even knocked down some along the way. Until August of this year, almost 38 million passengers had been transported in Colombia, according to figures from Aerocivil, which is its aeronautical authority. This is a very modest growth compared to the previous year of 2%. However, 2024 was a year in which historic passenger numbers exceeding 56 million were recorded.

To put this figure in context, it is a little more or less half of what moves in Mexico and Brazil. Within Colombia, domestic traffic represents 56% of the total. And Colombia is also an important nerve point for the movement of air cargo that positions it, let's say, as one of the three main cargo hubs on the continent and that also contributes, let's say, an important role in the development of aviation in the country. And I say when one thinks of Colombia, obviously the El Dorado airport in Bogotá comes to mind, which is the gateway to the country and the gateway to and exit from the country. It is an airport that at a continental level, despite its problems of saturation and operational complexities, has truly placed itself at the forefront in terms of its importance in the movement of both passengers and cargo. It is an airport that, due to its high level of congestion, is classified as a level 3 airport by Yata, that is, within the airport core, where there is already a true saturation situation. Despite this condition, during the last ten years the airport has been able to increase passenger movement by 53%, which is truly very, very relevant data. And well, Bogotá concentrates practically 80% of the air traffic that moves Colombia, that is, a great concentration around this hub and it is a country where its geography, many mountains and the difficulty of moving by land in many regions make the plane an essential transport.

Recently, the Official Airline Guys issued its annual report on the main hubs worldwide and within the top 50, as Bogotá stands out, which has been climbing positions in recent years and in 2025 it was located at number 20 worldwide, a very important position, already well above other airports such as AICM, El Tocumen in Panama and Guarulios in Sao Paulo. So Bogotá is currently at the top as the airport with the most passenger movement and the best connected in the entire Latin American region. El Dorado, well, for those of us who have traveled through there, we know that an airport that has undergone a great transformation, a modernization, let's say, in all its facilities and offers a quite pleasant travel experience with spacious, modern terminals, the immigration area, customs, the truth is that it is very large and allows agile transit both at departure and arrival. And well, a primary axis of this achievement has been the implementation of a long-term master plan that has taken many years, where the physical capacity of terminals, ramps, taxiways and facilities in general have really undergone a change for the better.

The EDMAX project, which means El Dorado Maximum Development, is in the making and aims to increase the airport's capacity by another 50% over the next 10 years. So we can really see here long-term plans that have been implemented and that continue to be forged to give this airport even greater impetus. And well, clearly the key player here at this airport has been Avianca, which is the main operator of the hub, which together with other important players such as Lancolombia, part of the LATAM group and the entry and development of low-cost competitors and a growing number of foreign airlines, have given a boost to the development of air traffic. In the last 10 years alone the number of flights has increased more than 20% in El Dorado, which is a very significant number. And well, to talk a little more about the country's airlines, it is important to mention that there is an aeronautical park of around 230 commercial aircraft that range from small turboprops like the Twin Otter to 787 Dreamliners, so let's say an aviation that ranges from the smallest to the largest in terms of airplanes. Avianca, which is the benchmark in Colombian aviation, the third oldest airline in the world after Qantas and KLM, in 2024 achieved record numbers transporting 38 million passengers, with a national market share above 50%, well above its competitors such as Lancolombia for example, and in the international market it maintains something like 20% of the market share. So Avianca is clearly the pillar and key player of this hub and it is a company that has also been part of Star Alliance for just over 12 years, which also gives it a window to the world in terms of all the shared codes and the routes to which it can connect globally. To remember a little about what Avianca has gone through in recent years, between 2018 and 2020 it faced a deep crisis due to internal conflicts, I don't know if you remember a pilots' strike that lasted several months and well, to finish it off, Covid arrived later to finish off an already complicated situation and this led Bianca to file for Chapter 11 bankruptcy in May 2020. It went through a reorganization process that lasted something like a year and a half, which culminated at the end of 2021 and as a result of this, a holding company called Avianca Group International Limited Agil, Agil, emerged, which curiously is based in the United Kingdom, not in Colombia or not in any country where this type of holdings are later established, such as Panama, and this company or this holding Agil groups together all the subsidiaries of the group, even though it maintains its operational base in Bogotá, since it is Let's say, governed by the laws of the United Kingdom. And well, Avianca's departure from this Chapter Eleven was very right on the right foot and from that moment on it has experienced a phase of growth and accelerated modernization.

Avianca currently operates something like 170 routes in more than 80 destinations and 25 countries, and this represents an increase of approximately 40% growth in its network in the last three years. And well, it has also strengthened the air cargo business, including the subsidiary Avianca México, which was the former Era Unión that was acquired by Avianca and was recently renamed Avianca México. Also in this process Avianca has greatly improved its operational efficiency, rationalizing the fleet, simplifying it around three main models, the bulk, let's say, the workhorse of its fleet is the A. It also has 16,787 freighters, sorry, Dreamliners and 7 A freighters, including those of the Mexican subsidiary. And with this it adds up to something like 160 aircraft, to which we must also count 138 that are on order until 2032. This order with Airbus was recently announced, very important to grow the A group of the NEO family.

Another very significant step in this recent, let's say, rebirth or relaunch of Avianca, was the creation of the Grupo Abra holding company. Approximately three years ago, Avianca together with the Brazilian GOL formed this company with the idea of forming a leading airline group in Latin America, capable of competing head-on not only against LATAM, which is its main enemy, but also against the large North American airlines and for this, seeking economies of scale, expanding its network globally and even with the idea of preparing a future IPO, which it is said would seek to generate something like 300 million dollars. Last year Abra acquired a majority stake in the Spanish airline Guamos Air, which is a capacity provider with wide-body aircraft and has been looking to incorporate new airlines. For example, some participation in SKY in Chile has been rumored, a memorandum of understanding was even signed with Aerolíneas Argentinas, but those plans were put aside a little when Gol accepted the Chapter Eleven process that is ongoing and is expected to emerge soon. And well, we also talk about LAN Colombia as an important operator in the country, it has more or less 20% share of the domestic market, its international role is more marginal and over the years it has basically maintained that scale of participation in the Colombian market.

The origin of LAN Colombia is very interesting, it was born as LAN Colombia in 2011 with the acquisition of the airline Aires, I don't know if you remember it, at that time it was bought by LAN Chile, LATAM did not yet exist. What Land Chile did was replace the fleet of 737 Sidas 8 that Aires operated with aircraft of the 320 family, that is, 318, 319 and 320 and currently has a dozen based, mainly in Bogotá and obviously its name changes to LATAM after the merger of LAN and also in 2016. Something that is worth highlighting about this company, from LAN Colombia or LATAM Colombia, is that it was able to include in its air operator certificate what we know as the AOC, an authorization to freely assign aircraft registered in different countries, allowing the fleet to be adjusted in a flexible and dynamic way, so that today it is not unusual to see aircraft of this airline operating between Bogotá and Medellín, for example, with Chilean registration, or between Cartagena and Cali with Peruvian registration. In the past this allowed it to operate international routes even with 767 aircraft registered outside of Colombia, for example. Another important point was the arrival of low-cost aircraft that made their appearance in Colombia, perhaps a little late compared to other countries, but which finally came to give a very important boost to demand and air transport in the country.

The milestone is marked by Viva Colombia, which was the first company in the country to really introduce this lowcost model, incorporating an element of competition and low fares, and this redrawn the game board seeking to democratize air transport significantly as a way to compete via price against the long-standing dominance of Avianc. This company, Viva Colombia, was founded by a group of Irish businessmen from the Irelandia company, who also had to do with the launch of Viva Aerobus in Mexico and also initially participated, although it later left, the Mexican company Yamsa, which today is the owner of vivaerobus. Precisely, although they shared the name of Viva, the relationship between the two Vivas, so to speak, the Colombian and the Mexican, did not evolve beyond an interline agreement that lasted a short time. Viva Colombia was renamed at some point as Viva Air to, let's say, expand its presence, starting with a subsidiary in Peru, it came to have 21 aircraft of the 320 family, including CEOs and NEOS aircraft. And well, from being eminently a domestic player, over the years it expanded ambitiously from the northern part to the southern part of the continent.

However, this expansion generated very strong financial stress and then came the famous issue of the pandemic that really hit them like a tsunami and they could not recover. So, unfortunately Viva Aire ended its operations very abruptly in February 2023, leaving tens of thousands of passengers stranded, there was even a failed purchase attempt by Avianca to try to relaunch the company, but lately they gave up because the authority imposed very, very severe conditions of divestment of slots in Bogotá particularly, in addition to the financial risks involved, so this buried Vivaer. Another Colombian low cost that was born a little later is Wingo, it is another company that has a very interesting background because at the time Copa, the Panamanian Copa had tried to develop a subsidiary within Colombia that could serve as a feeder for the Panama hub and recently they acquired the Colombian company Aerorepública, which was a one-time operator of 190, that is, 100-seat regional jets. This fleet was first replaced with four Boeing 737-700s given to it by Copa and over time it migrated to larger Boeing 737-800 aircraft as its standard fleet, of which 9 operate today.

Wingo has a fairly significant network of 20 routes, 9 domestic and 11 international and mainly operates in the northern region of South America, Central America and the Caribbean, with a fairly small share that is less than 10% in the domestic market. Another actor that appeared on the scene for a short time was Ultra Air, they began operations in 2022 with 6 to 320, trying to steal the market from both the Legacy and Viva itself. This airline was founded and directed by William Shaw, you will surely remember him as former CEO of Interjet and who was also one of the founders of Viva Colombia at the time, since Ultra lasted more or less a year, year and a half, it did not manage to position itself, its very aggressive fare strategy did not work for them and they left the market leaving a void that it came to fill.

JetSmart Colombia. JetSmart Colombia is, let's say, an extension of this Chilean company that we talked about in the last podcast about its subsidiary in Argentina, JetSmart with a much more consolidated, much stronger model and in just a year and a half since they began operations in Colombia, it has already achieved more than 10% share of the domestic market and is laying the foundations to strengthen its presence internationally. For now, it has eight neos aircraft based in the country with which it covers 17 routes to 10 destinations. Hey Fabricio, I have a question here about the whole story that you are telling us, which is super interesting by the way, as you mentioned the El Dorado airport in Bogotá, I am also going to go back a little to what you mentioned about Bogotá and ask you this question: Has it grown significantly in recent years and is it ahead of the rest of the airports in Latin America as you told us, Can you tell us more about the activity of global airlines that have boosted the growth of the other airlines that Does it serve them that they land there in Bogotá? Of course, Nico, it is a very accurate question because without a doubt there has been a notable increase in flights from world-class airlines with long-haul flights that have given this even greater boost to the Bogotá hub.

A few years ago Turkish arrived and more recently Emirates, this gave it a connection, an outlet to global hubs such as Istanbul and Dubai respectively. Similar to what happens in the ICM, the elevation conditions of the Bogotá airport imply that these two airlines have to make an intermediate stopover, they can arrive, let's say, from east to west but in the opposite direction it does not work, in the case of Turkish the operation is triangulated with Panama and does not have local traffic rights, while Emirates has a stopover in Miami in both directions and there it does have fifth freedom rights to sell. The route that has been mentioned in passing is the golden route of Colombia with the United States, Bogotá Miami is by far the main route and the arrival of Emirates came there to generate a very significant element of competition mainly for Avianca. The entry of Qatar Airways this year with biweekly flights between Doha and Bogotá via Caracas was also expected, but for reasons that I personally do not know, these plans have been postponed, but hey, it is another indication that Bogotá is attracting the attention of these large global airlines, the main ones with some envy also because we can already have them in these latitudes and it is. I think that in the places where they have been looking, it is in Colombia.

Where else in Latin America have they looked? Like not much, I don't think. No, well, look, they are already very well positioned, mainly in Sao Paulo and Buenos Aires, and like Bogotá, now defunct, as the new one, let's say the new pole of attraction as you mention, that is, the source of growth of these airlines has seen or has found in Bogotá a very important nerve point, because in addition, the geographical position is very attractive, despite the proximity to Panama, clearly the Colombian market, especially due to the importance of the domestic market, since it also offers an important alternative to the Copa hub in Panama and well, for many years airlines such as American Airlines and Iberia have participated in Colombia, which are the main foreign players and others have also participated for many, many years, such as KLM, such as Air France, such as Lufthansa, British Airways. So really the Bogotá hub is very, very well connected and not only in the Nico passenger part, but as I mentioned before, it plays a very important role in the cargo part, I mean, we don't have time to delve into that, but airlines from Asia, airlines from Europe, from Mexico, the United States, from South America are also arriving in Bogotá, with a very, very outstanding cargo activity. And look, to finish the topic of Colombia, I think it is very, very important to highlight the role of regional aviation that is manifested through the two main airlines within the sector, which are Satena and Clic and that really put Colombia as a very, very sui generis market in terms of how regional aviation continues to flourish and continues to play a very, very important role. This is not the case in other countries where regional aviation is really going through a real crisis.

The first, which is SATENA, means Air Service to National Territories, was created 60 years ago by decree of the Colombian government with a very clear mission which is to guarantee air connectivity to regions of the country that are difficult to access geographically or with little air infrastructure. What does this mean? Which are those destinations where no other operator provides service, is what is known in the United States as the Essential Air Service, that is, a subsidized operation but with a clearly social interest motivation of connecting regions and communities that otherwise would not have air service and that seems to me to be a lesson that should have been followed here in Mexico for example. But anyway, let's go back to Satena. Satena operates under the tutelage of the Colombian Air Force and combines a commercial approach with this component that I already mentioned of social service within a very, very clear niche, which respects it 100% and does not intend to do anything other than this. So its market share is not particularly large, it has 10% but it is a 10% that is made up of markets that are really very thin in density and with a very isolated geographical location, so much so that its network covers 84% of the Colombian territory with 55 destinations and about 160 routes. So Satena's coverage is really very, very important, which it carries out with 17 aircraft ranging from twin doters, which are 19-seat turboprop aircraft, to ATR 72, also new generation turboprops with a bucket for 70 passengers, and Atena's idea is to reach a total of 25 aircraft by the end of next year. So a company that remains faithful to its model, to its reason for being and that is growing and is ensuring connectivity is very, very important. The other regional airline. Yes, go ahead. I want to ask you a question about Satena, Fabricio. You mention that Satena has a primarily social mission. How do you think they have achieved, if not profitability because they are subsidized, as you mentioned, overcoming the desire to also join trunk airlines and generate somewhat unfair competition that could be a phenomenon that is being replicated, for example, in our country? What I see about Satena, Arturo and the Colombian market is that there is a very clear demarcation or let's say line between the destinations that are viable for Aviancas, LATAM, low cost and what Satena does. Satena does not really compete and, let's say, the larger airlines do not have, let's say, the conditions to be able to operate profitably. So there is a kind of respect, let's say, I say it in quotes, towards what each one does and what Satena is obviously looking for is not to get involved in competing where it is not called, let's say, despite the fact that it is a subsidized company and that has control from the State, it has been extremely faithful to its vocation, so I believe that that has been a large part of its success is that it has known how to stay within that portfolio of secondary tertiary routes in markets where it really couldn't even land a jet simply because of the runway conditions. or the operational conditions of those aerodromes.

Well, a success story not just referring to Atena as such, but to the country's aeronautical policy. Totally, totally. And it is a bit of what I mentioned at the beginning, how this aeronautical policy has given it congruence and has had a strategic vision that in Mexico we would call transexennial, that is, that transcends the administrations because even though there have been important changes in the political spectrum of the country, it has not really translated into lurches on the issue, let's say, of growth and. The development of the industry has been very consistent. Yes, it has been very consistent and good, the results are there for everyone to see. Exactly. And well, I finish with the second regional one called Click Air. This is a company that started in 2007 under the name EasyFly, but due to some brand conflict it had to be renamed and today it is simply known as Clic. It is a company that has also been positioning itself very well in the market, occupying medium-density market spaces, where they are too big for Satena, but too small for the airlines, let's say they operate mainline airplanes and well, it has grown to such a degree that today it operates 21 aircraft behind, that is, it is the second largest operator in Latin America after Azul, both 42 and 72 series airplanes and it reaches 28 national destinations with more than 30 routes, which gives it a market share of around 5%. And well, clic has an alliance with Avianca that includes codesharing schemes, sale of capacity in wet lease mode, that is, it is a true feeder as we know it in the industry, a feeder that plays a natural role for an airline like Avianca, both feeding and flanking in markets where Avianca could not operate with its planes because they are too large. In short, regional aviation, let's call it traditional, that we are seeing in Colombia, prospers and plays a key role in connectivity and socioeconomic development. Without a doubt, and a bit as you suggested Arturo, it should serve as a model to study, imitate as much as possible in other countries where this sector of regional aviation has not only declined, but in many cases has practically disappeared or already plays a totally marginal role. Finally, just mentioning that recently there has been diplomatic tension between Colombia and the United States, diplomatic relations are not going through their best moment and we hope that this political disagreement does not come to harm the good performance of the Colombian air market, which has positioned itself as one of the most dynamic in all of Latin America

Super interesting Fabricio, this has really been a super thorough x-ray of the Colombian market and this great example of success that aviation has had in Colombia. Arturo is now going to tell us about aviation in Peru. Arturo, what can you tell us? Aviation in that part of our continent.

Thanks, Nico. Well yes, for me talking about aviation in Peru is something very personal. You will remember that I worked at Aeroperú in the 90s, when President Fujimori's government opened the country's skies. It was a time, the truth is, of a lot of optimism, modernization, but also a lot of fragility. With the open skies policy that was implemented necessarily came new rules, competition already became something real because evidently there was much less state protection. And then, after the Aeroperú 603 accident and its consequent bankruptcy, all of this reminded us of what happens when ambition goes faster than institutionality.

I believe that this wound, in a way, still marks Peruvian aviation. After the disappearance of Aeroperú in 99, LAN, which is today Latam Perú, occupied that space with, in truth, a lot of efficiency, they put technology into it, they put money into it and for almost two decades it controlled the majority of the domestic market. They converted Lima or claimed Lima as a modern regional hub. But that also caused a highly centralized system. And to give us an idea of this, for example, in 2024, Peru transported around 2.6 million passengers, which represented a growth of 7% compared to 23 and also represented that they finally achieved pre-pandemic levels. Of that total of passengers, 26 million, two thirds were domestic and the other were international passengers.

However, the Jorge Chávez airport in Lima concentrates around 88, between 88 and 90 percent of that country's air traffic. That makes it not only the main Peruvian hub, obviously, but rather one of the most centralized systems in Latin America, since the rest of the passengers, around 3. 4 million were distributed between Cusco, Arequipa, Piura and fewer others, plus Iquitos, Trujillo, Tarapoto, in short, this Jorge Chávez airport has just been reconfigured, mainly modernized. They opened the second runway and then the new terminal recently, in June of this year, which gave it substantial vigor and capacity. However, road access and airport operating costs also remain the main bottleneck.

To get to the airport there is practically only one route and the airport usage rates are among the highest, if not the highest in Latin America. Aviation in general in Peru represents more than 36 thousand direct jobs and contributes about 0.4% of Peruvian GDP throughout the region. The country represents around 4.5% of Latin American air capacity. In summary, the Peruvian market is growing, but as we saw, it still depends too much on Lima. Today Peruvian aviation revolves around three main players.

First, LATAM Peru, which maintains close to 60% of domestic traffic, operates Airbus 319 and 20 for its internal flights, they have 767-300 there for routes Lima Miami, Lima Buenos Aires and lately they are incorporating Airbus 321 Neo and well, testing with new high-density configurations. Another important player is Skyline Perú, which brings a fleet that is actually quite modern with 320s neo and 321 neo and this is let's say the low cost that is growing with a fairly efficient and quite disciplined structure. Finally, Jet Smart Perú with 320 neos with 186 seats, that is, high density, which they bet on point-to-point routes, trying to break this dependence that we already described on Hobby Man. Therefore, the Peruvian fleet is almost entirely made up of Airbus narrow bodies, which gives them wide operational efficiency; however, they maintain short and medium range, the wide body is reserved only for some very select sections. And well, speaking of the Jorge Chávez airport, which, as I mentioned, even though it moves around 20 million passengers, currently has a capacity with the modernization it had, of around 37 million passengers per year. But I insist, access, poor public transportation and airport use fees continue to limit the competitiveness of Jorge Chávez. And on the other hand, meanwhile, airports like Cusco, Arequipa or Piura, which could become soft hops if there were a classic decentralization policy, are not happening this way, since Peru lacks a national connectivity program and the DGAC remains with limited resources and personnel, something that is a common denominator in a large part of Latin American countries.

The abrupt departure of Viva air Perú in 2023 precisely showed this fragility, the lack of coordination between the State and the operators and a weak support network for the passenger because it also left them voted out at the time of closure.

Arturo, I have been reading and hearing recently about a controversy at the Jorge Chávez and this has to do with a tax on connecting passengers that they are trying to implement soon and that generated a strong reaction or protest by the industry through organizations such as the IATA, Alta, etc.

What can you tell us about this?

Well yes, this is a controversy that is alive. Both IATA and several airlines, Fabricio, have questioned this new transit fee of around $13 that has been imposed by the Jorge Chávez airport in Lima, arguing that it reduces the competitiveness of the Peruvian hub compared to others in the region such as Bogotá or Panama, where connecting passengers do not pay that fee. The airport concessionaire defends the measure as part of the recovery of investments in this new terminal and the expansion of the airport, which we already talked about, but the debate, the truth, shows the tension between what it means to finance an infrastructure, but also at the same time maintain attractive air traffic in a terminal that aims to consolidate itself as the most important hub in the Southern Cone, something that this type of rates clearly does not favor, does not help them. The rate should have come into effect on these dates, apparently there was a request from the Peruvian government to extend it and now it has been frozen, it is still not applied. Thanks Arturo. And hey, I would like, if you allow me, to ask you one more question about the issue of Lima and Peruvian aviation.

We saw that something like 80% of the country's traffic is concentrated in Bogotá, but in Peru it is almost 90%, the degree of concentration is enormous. And then, what measures would you apply, let's say, so that companies like Sky or JetSmart could open regional bases without distorting the market and creating a series of routes that bypass the Lima hub? Jorge Chávez Well, yes, I think the opportunity is there. The first thing that perhaps should be done is to differentiate airport taxes at these secondary airports, so that flying from Arequipa or Piura can be significantly cheaper than flying from Lima. The other thing they could also do is flexible domestic interlines, that is, allowing connections between airlines without necessarily penalizing the passenger through agreements between them. Something that could be controversial is a national plan for mandatory routes. This seems to be something of an imposition, but if handled properly it could work. That is, each operator of a certain size must open at least three new routes a year to poorly served regions, perhaps subsidizing those routes, perhaps giving them flexibility that if they do not heat up, if they do not work, they could abandon them. And this wouldn't necessarily be a control, but it would be something that would bring about some balance. Fabricio Hey Arturo, I have a question here, going back a little to what you told us about your experience at Aeroperúrate and how do you see the present now? Do you see real progress in the institutions or are we still the same as before in Peru? Well, yes, definitely, both in Peru and in the entire Southern Cone there is progress, that is, there is more technical professionalization, the OASI has been significantly involved with its audits, making them a little more support audits and a DGAC, speaking of Peru, which is trying to modernize, but the truth is the system is still fragile. Nico In Peru, the short political cycles that we all know and the constant changes actually slow down any long-term strategy. A little different from what Fabricio told us in Colombia, right? Exactly, exactly, that I hope it does not break down with this struggle between Colombia and the United States, but anyway, what it needs is continuity, not so much, more diagnoses, in short, as long as that base is not consolidated, aviation will surely continue to depend more on the inertia of the market than on a vision of the State.

In summary, Peruvian aviation has demonstrated resilience, it has been growing as we saw, it is renewing its fleet and opening new routes, but it still lacks the fundamental thing, a national policy that understands that air connectivity is not a luxury, but that it means development. Aeroperú, in my nostalgia, was more than an airline, you will remember, a symbol of identity. Its fall left a very important lesson that precisely the institutionality matters as much as the fleet and the structure of the airlines. There is a new generation of airlines in Peru, they have a renovated airport and by far the most important, and an expanding market. The truth is, they have the opportunity to write a new chapter and perhaps this time they will be able to do it with stability. Which they lacked 30 years ago.

Hey Arturo, thank you very much, very interesting and above all to see some of the contrasts with the northern country, with Colombia, success stories in one and perhaps great areas of opportunity in another. And we are missing a very important topic, which is Central America and this COPA hub of the Americas in Panama. Nico, please go ahead.

Thanks Fabricio Yes, look, although Central America is not one of the largest markets in the entire region, it has had a lot of history and has gone through several airline creations, mergers and well, as you mentioned Fabricio, one of the creation of one of the most successful hubs, the one COPA has in Panama. So well, we know that the region extends from Guatemala to Panama, concentrates only 4.5 million inhabitants and moves more than 3.5 million passengers a year, which is very very important. It represents about 10% of air traffic in Latin America alone and the average growth has been quite interesting in recent years, in the last decade it has been between 5 and 6%.

The main drivers of this growth have been tourism, labor migration, intra-regional trade and transportation between North and South America, mainly due to the hop that I am going to comment on later. Currently we have several airlines, although only one is large and is a player of important sizes, which is COPA, it is a highly efficient hop model that I will talk about a little later, Avianca, which basically serves El Salvador, Costa Rica, Guatemala and is the heir to the legacy of what was TAC. We also have Volaris that serves the Costa Rica and El Salvador market, it is a low-cost airline with regional expansion and six aircraft, three in Costa Rica and three in El Salvador. And then there is a very very interesting aviation, which we were talking about the other day Fabricio, I don't know if you remember what regional aviation is.

Of course, regional aviation is a super important aviation that has developed in recent years and has very important sizes. For example, in Guatemala we have an airline that is TAC Airlines, which has short routes and connections between neighboring countries, it only flies six planes, but it serves Guatemala intra-regionally. We also have other regional airlines such as Tropicair, Maya, Islandair, La Costeña and Sansa, and these airlines play a key role in connecting small communities in the region and I think they can be an example of how regional aviation is very very important, as Fabricio mentioned, and that it has not really been maintained in other parts of Latin America.

Here I have a small example of how regional aviation is super important in this part of the continent. Tropicare is an airline that has 17 aircraft but serves up to 200 flights daily, just to see the magnitude of how much reg serves regionally. So this is basically what general aviation is. The main markets it serves that connect Central America with the world are basically three, it is the United States, which is the destination of the United States, it is 60% of international traffic and the second important country is Mexico and Colombia is the third most relevant with the area. Air cargo mainly flows through Panama and Costa Rica with the logistics hubs that it has and that is basically what it has. We are also going to see a little bit of history to later get to the airline and the part of aviation that has grown the most and has been successful. But let's see a little history. In the second half of the 20th century, each Central American country had its own national airline.

I don't know if you remember Guatemala had Viateca with 727 jet planes, Nicaragua had Aeronica and El Salvador had TAKA, Costa Rica had the famous ALQSA and Panama had Copa Airlines. Each country, although they were small countries, had its own national airline. Those were the times when each of the national pride they had, like other countries there was ANCA Colombia, in Mexico you had Aeroméxico and Mexicana, although there were two, but each country had its own.

However, fragmentation and high costs and lack of scale and lack of passenger numbers made it really difficult for these small airlines to compete against the big players in the north and south of the continent as a whole. And that is how at the beginning of the 90s the vision of a visionary in Latin American aviation emerged that I think we all remember was Federico Bloch. Federico Bloch was a Salvadoran businessman who had a very clear idea of merging the Central American airlines into a single group to create critical mass and really create an airline system that could compete with the others. And so, that is how Grupo Taka was created, integrating the Guatemalan airline Aviateca, Aeronica, Al AQSA and TAC under a single strategy, a single image and several small bases of operation and connecting everything that was Central America with the rest of the region. Only Copa Airlines decides to maintain its independence, they were not part of this conglomerate and opted for a different model basically focused on international transit via Panama. What they wanted to do was take advantage of how Panama is geographically located and really make a Hub. And it is a success story that I believe we have all read about. While many Latin American airlines were facing mergers, bankruptcies, restructuring, etc.

Copa Airlines followed a single path and a single destination. Since the 90s, he has opted to turn Panama into the Hub of the Americas, which is what Panama's airport is called today. And he took advantage, as I said, of its privileged geographical position and its political and economic stability. It developed a highly efficient model based on flight connectivity between the north of the continent and South America, with very, very efficient connection times, between 45 to 90 minutes. It has a disciplined use of a single aircraft, the 737, which allows it to reduce costs, have economies of scale and maximize its operational availability. It is a star-shaped network that when all the planes arrive, the passengers connect and go to the south of the continent or to the north. It is practically 100% oriented towards serving international routes. And that's how they made it extremely efficient and a successful airline. In the 2000s, to make it even more international, United Airlines became a strategic partner and shareholder of Copa and thus facilitated access to technology, to all its loyalty systems and even incorporated Copa into the entire United image, the paint, the logo, the uniforms, the customer service and everything.

Even if we see a Copa Airlines plane today, it is practically the same image as the one United had and the one United has today. Copa Airlines operates more than 350 flights from Panama with 110 aircraft connecting the south and north of the continent. It connects 80 destinations and 33 countries. So it's really a Hub that is extremely successful. It transports 20 million passengers a year and one of what it offers to the customer is this efficiency. Its punctuality exceeds 90% and is one of the most reliable and punctual airlines in the world. It obviously contributes, due to its importance and the number of jobs it has, about 4% of the country's GDP. So their model showed that if it was possible to create a mini hub in the Americas like a mini Atlanta or a mini Houston without depending on a large domestic market, they really created a hub like the North Americans have. Well, to make it even more international, it was part of Star Alliance and joined Star Alliance to connect Latin America to the rest of the world with flights that arrived, for example Lufthansa arrived in Panama and connected all of Latin America, or United flights arrived from various points in North America to Panama and connected several points in Latin America.

Then also being part of Star Alliance made it with this global vision that Pedro Heilbronn, who is the president and creator of this Copa hub, has always had, of internationalizing the airline and truly making it a global player. Hey Nico, COPA's strategic collaboration with the aeronautical authorities and the Tocumen airport, today known as the Hub of the Americas, has been fundamental. Don't you believe in developing long-term plans, a bit of what we also saw in Colombia, what should other countries learn from the COP hub? Sure, I think so. Yes, yes, it is core and it is very important that they have always seen each other as partners and have created this alliance. First of all, coordinated long-term planning. Since 2005 Copa, Tocum, NSA and the Civil Aviation of Panama operate under the same joint vision of the HOP.

They invest more than 1.5 billion dollars in infrastructure, they have always supported this job, they have created Terminal 2 with 20 new gates, capacity for up to 25 million passengers annually, avoiding the institutional fragmentation that holds back other countries like the one that Arturo told us about. Aeronautical policy has also always been open and stable. Panama has maintained an open skies model with more than 80 countries, which has allowed Copa to connect 85 destinations in 32 countries and has positioned it as the main connecting hub in Latin America. And finally, also the operational efficiency without congestion, the design of the hub in synchronized waves and this has been part of how Copa has programmed the flights with waves, we can say synchronized waves of 6 hours during the day, allows average connection times of less than 50 minutes and allows the maximization of fleet utilization and that you really connect the north with the south of the continent.

So in conclusion what we can say is that Central America has been a market of dreams and contrasts from the beginning, but really the one that has created a market, a successful system has been Copa, because Latin American aviation is not as dense here in this region as Bogotá can be, or like Peru, Brazil, all the other countries that we have mentioned, but it is geographically key and is geographically a point that can transfer passengers between the north and the south. And this is where COPA has become the great silent winner in history. It has shown that a well-thought-out operation can overcome scale limitations. So, that's basically what it's been. And well, it has been a story of mergers, of everything, but really the two points that I take away after having studied the Central American market, is that the example of COPA with the Hub it has in Panama is something that has always transcended and it is really an example that we all study. And the second point that I take away is that regional aviation is super important in our part of the world, in Latin America, given that we do not have levels of passenger transport like in Europe, or like in Asia, or like in the north of the continent, regional aviation is key. And in Central America it has developed quite efficiently. And these are the cases that I mentioned, like the one we have in Belize, etc. And in Guatemala, then.

The one from Tropicare and the one from Guatemala. So, basically, and I think it should be a topic that we should analyze in more depth in one of these podcasts that we have at Altitud. Excellent, Nico. Those of us who have had the chance to go through the Hub of the Americas, I mean, I had the opportunity at the beginning of the year, because of our age, we are surprised by the level of sophistication and functioning like a Swiss watch, wow, a truly world-class Hub that we would like to have here and that I am sure would like to have in many other parts of the world. And quietly, quietly they grew it in an efficient way that is what it is today with COPA.

Yes, totally. So, much of what we have studied, talked about, also serves as a framework of reference and success stories that should be looked at and learned from. And well, with this we conclude our overflight of the main aviation markets and actors on the Latin American continent. 2 Podcasts, then, that I really liked, which reaffirm the vitality of the drive that this region has been showing over the last few years. After Asia Pacific and Africa, Latin America and the Caribbean is the region that registers the highest growth rates in the airline industry.

Despite all the complexities, challenges and in several cases the delays even in infrastructure, regulation and purchasing power that the countries that make it up suffer, world-class airlines like Avianca, Copa Latam will undoubtedly continue to give a lot to talk about in the months and years to come, so I also believe, we will soon return to take another look in future episodes of this podcast around the region. As you already said Nico, the topic of regional aviation is undoubtedly very, very important and well worth taking a deeper dive, since it has been six months since we began this high-altitude journey and the truth is that it has literally flown by. Thank you very much for joining us and preferring us, we will hear from you soon in one more episode and in the meantime we are waiting for you as always on our social networks and on our website. See you later and have a good trip. Thank you all very much for listening to us. Good morning, greetings. Thank you for flying with altitude. Follow us on our social networks and visit our Trip website. We are waiting for you on our next flight