Routes Reconnected: Avianca CEO sees long-term growth potential at home

Avianca was implementing a reorganization plan prior to the COVID-19 pandemic, but the total cessation of flying in Colombia for about six months had a devastating impact on the airline and led to it filing for Chapter 11 protection in the US.

Speaking at the virtual Routes Reconnected conference, CEO Anko van der Werff said the “core strategy” being implemented prior to COVID-19—slowing its rate of growth, dropping “nonsensical routes” that didn’t touch hubs, and improving on-time performance—was “absolutely working.”

But COVID-19 hit and “there was no income whatsoever,” van der Werff said. Save for some humanitarian relief flying, Avianca shut down for six months.

Now the airline is navigating the Chapter 11 process in the US—the carrier trades on the New York Stock Exchange—and is adding back capacity. Avianca is flying 15% of pre-COVID-19 capacity currently and hopes to increase that to 30% by next summer.

Domestic traffic is rebounding faster than international flying, and leisure and VFR traffic demand is coming back more quickly than business traffic, van der Werff said.

“Over the long term, I’m actually quite optimistic,” van der Werff, who joined Avianca as CEO in 2019 after working as a senior executive at Aeromexico, said.

In particular he argued that there was room for growth in Colombia, Avianca’s largest market. The flight between Colombia’s two largest cities, Bogota (BOG) and Medellin (MDE), is 35 mins., versus more than 8 hours driving, van der Werff said.

“We are looking for more destinations domestically, but most of our growth [domestically] will be more frequencies,” he said.

Photo credit: IATA