avio-natr42deaeromar.jpg.crop_display EneasMx

The MRO Implications Of Synergy Group’s Pan-Latin America Airline Ambitions

Avianca’s parent Synergy Group has made two moves this week which show that it is positioning itself as the only airline group with the ambition to be omnipresent throughout Latin America.

Not content with opening in September what is probably Latin America’s most impressive MRO facility, the new Avianca Aeronautical Center in Rionegro near Medellin, Avianca’s parent Synergy Group has made two moves this week which show that it is positioning itself as the only airline group with the ambition to be omnipresent throughout Latin America.

In addition to expanding Synergy Group’s already vast route network in the Spanish-speaking and Portuguese-speaking Americas, the group’s two latest moves may have important MRO implications for Synergy Group’s many airlines.

Through its subsidiary Synergy Aerospace, Synergy Group owns a two-thirds majority share in Avianca Holdings, the large airline group which was formed in February 2010 by the merger of Colombia’s Avianca and El Salvador-based Grupo TACA – a company which owned airlines in several Central American countries.

Before the Avianca-TACA merger, each of those two carriers had acquired other airlines in South America. Ultimately, however, El Salvador’s TACA Airlines – Grupo TACA’s flagship carrier – and all of TACA’s other subsidiaries were renamed under the Avianca brand.

As a result, today, Avianca Holdings has eight different operating subsidiaries: the original Colombian carrier Avianca; Avianca Cargo, formerly known as Tampa Cargo and also based in Colombia; Avianca Costa Rica; Avianca Ecuador; Avianca El Salvador; Avianca Guatemala; Avianca Honduras; and Avianca Peru.

In addition, Synergy Group – a true industrial conglomerate which owns businesses in a wide variety of industries – owns the sizable Brazilian carrier Oceanair Linhas Aéreas S/A. Although legally a separate entity not controlled by Avianca Holdings, Oceanair operates under the name Avianca Brazil, having licensed the Avianca brand name.

Additionally, Aerotaxis La Costeña S.A, an ATR 42 operator which does business as Avianca Nicaragua, operates as part of the network brought to Avianca Holdings by its merger with Grupo TACA.

Now fast-forward to this week. On November 14, Aeromar, Mexico’s second-largest regional airline, announced it had ordered six ATR 72-600 and two ATR 42-600 turboprop regional airliners, at the same time securing options on six more ATR 72-600s. The first aircraft from the order will be delivered next month.

Aeromar, which is based at Mexico City’s Benito Juárez International Airport, already operates two ATR 72-600s, along with nine ATR 72-500s and four ATR 42-300s. The four older ATR 42s will be replaced by some of the aircraft from Aeromar’s new order.

However, most of the 600-series ATR regional aircraft involved in Aeromar’s new order will be used to expand its fleet, both to increase capacity on its densest existing routes and to add new routes to its network. Aeromar’s network links at least 22 destinations in Mexico and the southern USA.

While Aeromar’s order for ATR turboprops appears unremarkable in itself, another sizeable ATR order announcement the following day, November 15, started indicating the potential scale of the pan-Latin America ambitions of Synergy Group and its subsidiary Synergy Aerospace.

In announcing an order for 12 ATR 72-600s, plus options on six more, for a new regional carrier based in Argentina, Synergy Aerospace revealed that it had been behind the ATR order placed by Aeromar the day before – and that the Aeromar order represented part of a strategic investment by Synergy Aerospace in the Mexican regional airline.

Synergy Aerospace also revealed that its new Argentine carrier, Avian Líneas Aéreas, would become a licensee of the Avianca brand name and so would operate under the name Avianca Argentina.

From bases at Buenos Aires’ downtown Aeroparque Jorge Newbery and Cordoba’s Ingeniero Aeronáutico Ambrosio L.V. Taravella International Airport, Avianca Argentina plans to serve domestic routes in Argentina which are under-served now or are not served at all.

The new Argentine regional carrier’s growth is expected to be rapid. It plans to begin operations in the first quarter of 2017 and aims to put in service by January 2018 all 12 ATR 72-600s ordered for it by Synergy Aerospace.

That company’s moves to invest in a well-known existing regional airline in Mexico – the most populous Spanish-speaking nation in all of the Americas – and to start a new regional airline in Argentina, the third-most populous Spanish-speaking nation in the Americas with more than 41 million people, should complement strongly its existing presences in Brazil and Colombia.

At present, LATAM Airlines Group is the largest airline group in Latin America. It has passenger-airline subsidiaries in Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay and Peru, as well as cargo-airline subsidiaries in Brazil, Chile, Colombia and Mexico.

LATAM Airlines Group operates a fleet of aircraft which, at more than 320 aircraft, is at least twice the size of the total fleets of the Avianca Holdings carriers and the other Avianca-branded airlines. However, Avianca-branded carriers have more than 180 aircraft on order, a considerably greater number than does the LATAM Airlines Group.

But what is most eye-catching about Synergy Aerospace’s airline operations throughout the Latin and Spanish-speaking Americas is the company’s fast-growing geographical coverage and also the sheer geographical scale of its pan-Latin and Spanish-speaking Americas ambition.

In announcing its ATR 72-600 order for Avian Líneas Aéreas on November 15, Synergy Aerospace gave notice to the world of its ambition. In the news release announcing the order, Synergy Aerospace said: “Its extensive operations will be further enhanced through recently announced ventures in Argentina (Avian Lineas Aéreas) and Mexico (Aeromar), giving it an unrivalled presence extending from the Rio Grande to Patagonia.”

Even so, Synergy Aerospace’s emergence as a rapidly growing airline presence in the South, Central and Spanish-speaking Americas markets begs some obvious questions.

First, where will Synergy Aerospace perform the MRO required for the ATR turboprops it has ordered for Aeromar and for Argentina’s Avian Líneas Aéreas?

It seems very likely that much of the base MRO eventually required for those aircraft will be performed at the new Avianca Aeronautical Center in Colombia, since Avianca is basing the MRO operations for its own nine ATR 72-600s there. Could the Colombian facility handle all Synergy Group-related ATR MRO? And could ATR eventually select the Avianca Aeronautical Center as a Latin American centre of excellence for MRO for ATR regional aircraft?

Another question concerns the fact there are still eight countries in the Spanish-speaking Americas in which Synergy Aerospace has not yet formed airline subsidiaries or made strategic investments in airlines: Bolivia, Chile, Cuba, the Dominican Republic, Panama, Paraguay, Uruguay and Venezuela. Does it intend to do so, particularly if and when the economy of Venezuela, a country with more than 30 million people, stabilizes?

Next, does Synergy Aerospace intend to extend its airline-operating activities to countries in Central America, the Caribbean and South America which are not Spanish-speaking or Portuguese-speaking?

Additionally, does Synergy Aerospace intend to extend its strategic investment in airlines to carriers in the USA or Canada, particularly given that the Canadian government announced last week that it will allow foreign ownership stakes of up to 49 per cent in Canadian carriers?

Also, while Synergy Aerospace is venturing into the Argentine and Mexican passenger-travel markets by means of investments in regional airlines, does it plan to grow those operations eventually into mainline carriers?

Another obvious question: will Synergy Aerospace’s strategic investment in Aeromar see the Mexican regional carrier being rebranded as Avianca Mexico one day? Could that airline evolve into a mainline carrier?

Yet another question potentially comes to mind.

Earlier this week, fast-growing Mexican low-cost carrier Volaris announced it is launching a new subsidiary in Costa Rica (the subsidiary naturally enough being named Volaris Costa Rica), which will begin operations on 1 December with Airbus A320-family aircraft.

So does Synergy Aerospace consider Volaris Costa Rica and its parent Volaris as rivals? Or would it ever consider teaming with fast-growing, well-run Volaris – whose CEO Enrique Beltranena was formerly the chief operating officer of TACA – to strengthen its presence in the Mexican and Latin American markets, perhaps to loosen the stranglehold Copa Holdings has in Panama?

To find the answers to these and many other questions about Synergy Aerospace’s ambitions, every airline, aircraft manufacturer, MRO facility and air traveller throughout Latin and Spanish-speaking America will continue to watch the evolution and growth of Synergy Aerospace and its many Avianca-branded airline subsidiaries and licensed carriers with considerable interest.

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