U.S.-COLOMBIA FLIGHTS TAKEOFF

UNCLAS BOGOTA 008592 SIPDIS SIPDIS E.O. 12958: N/A TAGS: EAIR ECON EINV CO SUBJECT: U.S.-COLOMBIA FLIGHTS TAKEOFF ¶1. SUMMARY: A new aviation agreement between the USG and the GOC unleashed a flood of interest by U.S. and Colombian carriers. The agreement should increase flights between the two countries by at least 50 percent. U.S. carriers with established flights to Colombia want to expand the number of flights and destinations, while new U.S. carriers seek to break into the Colombia market. Colombian carriers also plan to take advantage of the new agreement by increasing flights to the U.S. END SUMMARY. -------------- A New Agreement Gets Off the Ground -------------- ¶2. The USG and the GOC reached an agreement to expand and liberalize civil aviation relations at the end of September, following two years of negotiations. The new agreement represents the first increase in flights between the two countries since 2003. It boosts scheduled weekly frequencies (round trip flights) of U.S. carriers by 30 percent, from 70 to 91, with increases phased in between December 2007 and October 2008. In addition, it opens up unlimited flights for U.S. carriers to the tourist-friendly cities of Cartagena and Barranquilla, and permits charter services to Cartagena and three other destinations. Colombian carriers received corresponding increases in frequencies. Given the high level of industry interest in the new unlimited flights, the agreement should result in at least a 50 percent increase in flights between the U.S. and Colombia. -------------- Runaway Interest in New Flights -------------- ¶3. Six U.S. carriers have expressed interest in new flights to Colombia. Three of the carriers, American, Delta, and Continental, already have daily flights to Colombia but look to increase their frequencies and destinations. Others, including Spirit, Jet Blue and US Airways, hope to enter the growing Colombia market. Some of the proposed new flights also open new U.S. destinations. Most, however, focus on Florida given the heavy concentration of Colombians living there. ¶4. American Airlines, which currently has twice daily flights from Miami to Bogota as well as a daily flight from Miami to Medellin, started a new daily flight to Barranquilla on December 13. American intends to add additional daily flights to both Bogota and Medellin. American also plans to shift some frequencies previously used for Cartagena flights (now unnecessary with Cartagena's new unlimited flight status) to cover other routes. Jose Maria Giraldo, American's General Manager for Colombia, told us their decision to increase flights to Colombia was based on the country's increased security, booming economy, and record-breaking numbers of tourists. Giraldo anticipates demand for flights between the U.S. and Colombia will grow by at least 10-15 percent annually over the next five years. ¶5. Delta Airlines currently has one daily flight from Atlanta to Bogota (although it partners with Colombian carriers for other flights). Delta plans to offer new daily service from New York to Bogota, and from Atlanta to Cali (3 flights per week) and Medellin (4 flights per week). Continental Airlines, which currently has daily flights to Bogota from both Houston and Newark (as well as to Cali), plans an additional daily flight from Houston to Bogota. ¶6. Low-cost U.S. carrier Spirit Airlines has been the most aggressive of the new entries into the Colombia market. Spirit plans three flights a week between Fort Lauderdale and Cartagena, and is negotiating a partnership with Colombian carrier Aires for flights to both Bogota and Medellin. Martin Harrison, Spirit's Chief Operating Officer and Executive Vice President, told us Spirit sees Colombia as key to its plans to expand into Latin America. Spirit Airlines Latin America Director of Communications Juan Arbelaez explained that the two million plus Colombians living in the U.S. create a huge potential market. Arbelaez said Spirit projects offering fares 30-40 percent lower than current fares, and expects this will put pressure on the entire market to drop fare costs. ¶7. Other U.S. carriers looking at the Colombia market include US Airways and Jet Blue. US Airways hopes for daily flights between Charlotte and Bogota. US Airways President Doug Parker said he considers Colombia an especially attractive market that fits well into US Airways' international strategy Jet Blue hopes to move deeper into the Florida market with Orlando-Bogota and Ft. Lauderdale-Bogota routes. -------------- Colombian Carriers Pursue More Routes -------------- ¶8. Avianca, Colombia's largest airline plans flights from Bogota to Washington DC six times a week, as well as once-a-week flights from Bogota to Los Angeles and from Barranquilla to New York. Avianca is also expanding internationally with new flights to London and Frankfurt. AeroRepublica, the local unit of Continental Airlines' Copa Holdings, plans new daily flights from both Bogota and Cali to Miami. Colombian carrier Aires plans daily flights from Bogota to New York and from both Barranquilla and Cartagena to Fort Lauderdale. Brownfield