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Colombia's Easyfly Airline Seeing More Profits, Expanding Abroad

02/24/2012 | 11:10am US/Eastern
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  --Colombian airline Easyfly, in its sixth year, aims for IPO in 2014 
  --Easyfly plans first international service, to Aruba and Venezuela, in April 
  --Airline serves out-of-the-way cities, some in zones where leftist rebels have a presence 
 
   By Dan Molinski 
   Of  
 

Colombian airline Easyfly SA, which touts itself as the nation's only low-cost airline, has seen two straight years of profits following its 2007 launch and hopes to become a publicly traded company by early 2014, its president said.

"We're turning profits steadily now and I think we'll do an IPO [initial public offering of shares] in about two years," Alfonso Avila, Easyfly's founder, president and a main shareholder, said in an phone interview Wednesday. Last year's profits were "very good," Avila said, without providing precise figures. In 2010, the airline reported profits of about $400,000.

Avila said Easyfly, which services 15 cities in Colombia including Bogota, plans to invest $6 million this year to expand routes, including its first international flights, to the Caribbean island of Aruba and the Venezuelan city of Maracaibo, slated for April.

Of the six commercial passenger airlines in Colombia, Easyfly is the second-smallest. The Bogota-based carrier has carved out a 4% share of Colombia's 15-million-passengers-a-year domestic market. Top airline Avianca, which is part of airline group AviancaTaca Holding SA (PFAVTA.BO), controls a commanding 55% of flights within Colombia.

Lan Colombia, part of the Chilean flagship carrier LAN Airlines SA (LFL, LAN.SN), is the second-biggest domestic flyer with 19% market share, while Copa Colombia, part of the Panamanian airline group Copa Holdings (>> Copa Holdings, S.A.), has 12%, and government-owned Satena is fourth with a 6% share of domestic flights. A regional carrier based in Medellin called Ada and charters make up the rest of the market.

Another low-cost airline, VivaColombia, is scheduled to launch later this year.

Though Easyfly's overall market share remains small, its president says the airline, which owns 12 planes, has a 33% share of the "niche market" it focuses on -- flights between small and medium-sized cities that other airlines have largely shunned.

"Our strategy is to have flights that don't always need a connection in the Bogota hub, and this has been successful," said Avila, who in 1993 co-founded AeroRepublica airline, which in 2004 was bought by Copa and changed its name to Copa Colombia.

The airline's load factor--the proportion of seats filled on flights--rose last year to 75% from 65% in 2010, according to the civil aviation agency Aerocivil. The 2011 figure is slightly lower than 77% average among Colombian airlines.

Among its routes, Easyfly is the only airline to offer direct flights from the northeastern city of Arauca, population 80,000, to the north-central city of Bucaramanga, population 600,000. A round-trip ticket for this route runs as low as $169. Unlike the standard for low-cost airlines, Easyfly doesn't charge for the first checked bag.

Servicing out-of-the-way places can be particularly attractive for passengers in Colombia, which remains entrenched in a decades-old civil conflict that makes highway travel between many smaller cities too risky.

Avila also said Easyfly hopes to add to its customer base following a labor dispute between the government and air traffic controllers last week that forced top airline Avianca to cancel 150 flights over a five-day period, stranding thousands of Avianca ticketholders.

"I'm not sure what Avianca's policy is and I can't speak for them, but here at Easyfly we'll delay flights if need be, but cancelling a flight is the last option," said Avila. He said only two Easyfly flights had to be canceled last week.

An Avianca representative, who asked not to be identified, said it was forced to cancel flights rather than delay them due to the sheer volume of flights the airline flies per day, which caused delays to pile up.

In December, Easyfly had the best on-time record of all the country's airlines, with 84% success rate, the company said, citing data from Aerocivil.

Avila says there are challenges in the industry, including a lack of adequate airport infrastructure. But he said he is confident the government is addressing the problem by investing properly.

-By Dan Molinski, Dow Jones Newswires; 57-310-867-6542; dan.molinski@dowjones.com

Stocks mentioned in the article : Copa Holdings, S.A., Lan Airlines S.A.
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