Making Copa Great Again: A one-time global profit champ starts an LCC to assist in its comeback
Late last month, in a presentation to investors, Copa Airlines hinted at changes to come in Colombia, one of its most important markets. Now, these changes—big changes—are plain to see.
Colombia, Copa implied, was not performing well, even after years of rightsizing following its 2005 purchase of AeroRepublica, a local airline with a smallish domestic and shorthaul international presence. Today, what’s now called Copa Colombia, which has a fleet of 13 aircraft (four B737-700s and nine E190s), does fine with its flights to and from Panama City. But its non-Panama flying— disconnected from the rest of Copa’s network and heavily oriented toward low-yielding leisure routes to tourist spots like San Andrés, Cancún, Havana and Punta Cana—loses substantial sums of money. Much of this underperforming flying uses E190s, which are smaller and thus carry higher-than-B737 unit costs to begin with, even before taking into account their lowdensity, two-class configuration with a full-service offering including free meals and drinks. Much of its traffic, moreover, comes through third party channels that charge booking fees.
Copa’s Colombian experience hasn’t gotten easier since LATAM bought its way into the Colombian market in 2010 or since the 2012 advent of VivaColombia, an ultra-LCC with a big domestic presence that is creeping into international markets like Lima, Quito, Miami and—yes—even Panama (using an alternative airport there). LATAM, meanwhile, is working on a new plan to boost shorthaul earnings that might make it look more like an LCC operation—it already flies narrowbodies with single-class configurations and quick turn times. Avianca, to be sure, Colombia’s largest airline, is no pushover. And compounding Copa’s Colombian conundrum: the country’s recent economic troubles, along with its sharply depreciating currency. It was time, therefore, to try something radical. The answer: Wingo.
Wingo? That’s the name of a new Colombian unit that Copa will launch in December. Like Air Canada’s Rouge, Lufthansa’s Eurowings and other airlines within airlines, Wingo will be a low-cost unit, in its case with a separate management team—led by a former JetBlue and Avianca executive—charged with developing its own commercial strategy. That strategy, in general, will involve essentially taking over Copa Colombia’s non-Panama…
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