Celebrating a Historic Joint Order and 15 Years of Market Growth

It is amazing to think that this year marks the 15th anniversary of LAN, TACA and TAM placing a historic joint-order for 90 A320 aircraft. A breakthrough in Latin America’s aviation market, it was the first time in the region, and possibly in the world, when more than one airline came together to write their own destiny.

It all started as a friendly chat during the Paris Airshow of 1997. Roberto Kriete, Chairman and Owner of TACA, and Federico Bloch, the now deceased former CEO of TACA, were complaining to me that compared to North American airlines Latin American carriers could not get competitive pricing. I explained to them that North American airlines were buying aircraft in larger quantities, making it easier for them to negotiate better pricing. It was then that Roberto and Federico had the brilliant idea to join forces with other airlines in the region. They approached the owners of LAN and TAM and convinced them to pool together to negotiate with the aircraft and engine manufacturers. While it seems simple enough, this was an unprecedented move, and I believe it ended up working so well because the three companies were profitable, privately held and managed closely by their owners. The negotiations were with the owners and their teams and no lawyers! Without the bureaucracy and administrative red tape you often encounter in today’s negotiations, we had an MOU in six months and a firm order three months later.

The order went on to catapult Airbus in Latin America. Airbus barely had 7 percent market share at the time and today we’ve reached 50 percent of the 100 + seat market. It also paved the way for LAN, TACA and TAM to order more than 400 Airbus aircraft, making up more than half of the region’s Airbus aircraft in operation today. Of course, since then, the region has seen some extraordinary consolidations, reorganizations and acquisitions, and these original “Three Amigos” have now become the region’s biggest airline groups - Avianca and LATAM.

While it is nostalgic to think about simpler times, the industry has never been more exciting and fast changing. With growth rates of nearly 6 percent over the next 20 years, Airbus looks forward to gaining more market share and reaching 60 percent in the next 10 years. Here’s to the next 15 years!

With more than 30 years in the aviation industry, Rafael Alonso is the Executive Vice President of Airbus Customer Affairs for the Latin America and the Caribbean region, responsible for all Airbus commercial activities and customer relations in more than 40 countries.