Colombia Bans International Flights Until September

As some countries look to re-open their borders, Colombia is going the other way. This week, under a…

Colombia Bans International Flights Until September

As some countries look to re-open their borders, Colombia is going the other way. This week, under a health emergency declaration, Colombia extended its border closures through to August 31. While the country has had reasonable success at keeping C-19 infection rates down, international flights will remain grounded until the health emergency declaration lapses at the end of August.

Colombia has announced its borders will remain closed to all international flights until August 31. Photo: Getty Images.

Current Colombian border closure order now extended by three months

Colombia stopped all commercial flying on March 23, immediately before the country went into a strict lockdown regime.

The flying ban and wider economic repercussions proved a tipping point for Avianca, causing the national carrier to file for bankruptcy.

Since Colombia’s borders were closed and flights banned, only approved emergency and repatriation flights have operated. Countries such as Germany, the Czech Republic, Belgium, Spain, and the United States have all been given the green light to airlift out their citizens.

As of May 11, the United States had sent 32 flights into Colombia to repatriate 3,349 of its citizens.

Things will be very quiet at Bogota’s El Dorado International Airport over the next few months. Photo: Reg Natarajan via Wikimedia Commons.

But it will be some time until the familiar colors of an American Airlines plane are regularly seen again at Bogota’s El Dorado International Airport. The original border closure order, due to expire shortly, was extended until the end of August on Wednesday.

“The restriction on international air transport goes hand in hand with the health emergency, i.e., until August 31. Until that date, international flights are not expected to be resumed,” said Colombia’s transportation minister, Angela Maria Orozco, in an interview this week.

No domestic flights in Colombia until July at earliest

Colombia’s decision to ground flights sees it in lockstep with many other countries in the neighborhood. Argentina, Peru, Ecuador, El Salvador, and Panama have all grounded commercial flights.

Colombia has one of the most stringent general responses to C-19 in the world. But this had had a dramatic impact on local airlines like Avianca. Despite entering bankruptcy, Avianca had hoped to resume domestic flying in June.

But at the same time as announcing the extension of international flight bans, Angela Maria Orozco poured cold water on those hopes this week. When asked about the resumption of domestic flying, the minister said domestic flights remain grounded and will not resume until at least July.

“We are reviewing how the pandemic evolves, and decisions will be made depending on that.”

Avianca had hoped to resume domestic flights in June. Photo: Getty Images

No good news for bankrupt Avianca

Colombia’s 100-year-old national carrier was under pressure well before the pandemic hit, and the Colombian Government initiated its lockdown procedures. Earlier this month, Avianca filed for Chapter 11 protection in a New York court.

At the time, the airline said C-19 had proved a tipping point for them, saying their revenue had been cut by 80% since flights were grounded in March.

But Avianca hoped to use the provisions of Chapter 11 to restructure and resume flying again.

“We are committed to maintaining connectivity for people, families, and businesses, and we look forward to gradually resuming our passenger flights as travel restrictions are lifted,” said Anko van der Werff, Avianca’s CEO earlier this month.

In 2019, Kingsland Holdings Limited, an independent third party of United Airlines, took control of Avianca Holdings, the parent company of Avianca.

This week’s decision by the Colombian Government dashes Avianca’s hopes of resuming flights soon. Hosing down hopes, Colombia’s President, Ivan Duque, was emphatic when he said;

“I do not see, in the short term, that we will have the possibility of re-establishing international transport.”

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Indigo Partners Eye Return To Low Cost For Virgin Australia

Low-cost airline operator Indigo Partners has commented publicly on its interest in Virgin Australia for the first time…

Indigo Partners Eye Return To Low Cost For Virgin Australia

Low-cost airline operator Indigo Partners has commented publicly on its interest in Virgin Australia for the first time this week. The private equity firm’s co-founder and managing partner, Bill Franke, confirmed a long-standing and current interest in the collapsed airline.

Bill Franke’s Indigo Partners is circling Virgin Australia. Photo: Brisbane Airport Corporation.

The Arizona based private equity firm is one of the shortlisted bidders in the Virgin Australia restructuring process.

Australia is “a very interesting market”

Oaktree Capital Management is said to be underwriting the Indigo Partners’ bid. Oaktree is majority-owned by Brookfield Asset Management. Brookfield failed to submit an initial bid for Virgin Australia last week, having been frustrated at how the administrator was managing the sale process.

“We see Australia as a very interesting market,” Mr Franke told a seminar hosted by CAPA – Centre for Aviation mid-week.

While Indigo Partners doesn’t have current operations in Australia, it has long been interested in flying here. They had teamed up with local business figures in an ultimately unsuccessful bid for Ansett after its collapse in 2001.

Bill Franke calls Australia’s aviation market “very interesting.” Photo: Getty Images.

In 2018, Indigo Partners came close to buying HNA’s 20% stake in Virgin Australia. It also spoke to Etihad and Nashan Group about buying their stakes. Again that bid failed when other shareholders balked at Indigo Partners having a controlling interest in Virgin Australia.

Rumors have also circulated recently that Indigo Partners was looking at acquiring an Australian air operator’s certificate and going it alone.

Bill Franke is here to help

After long declining to comment, Mr Franke has popped up, virtually at least. Border closures have seen him grounded in the USA, but local advisors are moving his bid forward. Mr Franke made his first public comments about his firm’s interest in Virgin Australia to CAPA on Wednesday.

“We think the country needs two airlines, and we want to be able to assist Virgin Australia in being one of those two airlines.”

Bill Franke (left) in 2018. Photo: Casa Rosada via Wikimedia Commons.

Bill Franke is a low-cost airline specialist. His firm has majority stakes in airlines like Frontier, Wizz, Volaris, and JetSMART. Should Indigo Partners ultimately be successful in its bid for Virgin Australia, would the restructured airline be taken back to its low-cost roots?

That’s not the preference of Virgin Australia’s receivers or the Australian Government. Both are keen for the airline to be sold as a going concern and for it to continue as a full-service airline.  This publicly stated preference has raised a lot of eyebrows, many considering it both unreasonable and naive.

Not necessarily going downmarket, says Mr Franke

But Mr Franke knows he needs to sing from the right songsheet, saying the automatic assumption he’ll take Virgin Australia down market is incorrect.

“I get asked all the time, are you going to keep international flying, are you going to become an ultra-low-cost carrier and the answer to that is: you’re going to have to fit yourself to the market and what the market wants.

“We have not made that analysis yet. We have to look at the Australian market in terms of what the consumer wants in the product.”

But Bill Franke did point out that low-cost carriers have performed better in the 21st century than full-service airlines

Future owners of Virgin Australia are looking to rightsize the fleet and get rid of surplus aircraft. Photo: Getty Images.

Remaining bidders at odds with the administrator over the future direction of Virgin

Virgin Australia’s administrators, Deloitte, are keen to preserve jobs at the airline and see as many creditors paid as possible. Virgin Australia’s management, still on board and working with Deloitte, wants to see the restructured airline retain its international routes.

That’s not what most of the shortlisted bidders want to hear, with the majority also pushing hard to downsize the fleet to a single type: Boeing 737s. They want to get rid of the leased widebodies and surplus 737s.

Mr Franke knows he has to stay onside with Deloitte if he is to succeed in buying Virgin Australia. Thus far, he’s been very diplomatic about what he plans to do with the airline. But his experience in the industry and his preferred operating environment suggests an Indigo Partners owned Virgin Australia could be more Jetstar than Qantas.

As Mr Franke notes, that’s where the money is.

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