In the fight against low costs, airlines bet more on "door to door" than on holidays | Opening business

To improve its profitability and compete with aggressive low-cost prices, Aerolíneas Argentinas relies on non-airline products, which already represent 10% of the revenues of the state-owned company. One of the pillars of this strategy is its own "door to door" service for purchases abroad, which accumulates more than 1000 shipments since its implementation last May and its national version, which is scheduled for release next month. As part of the official presentation of the new application of the flag application, the President and CEO, Luis Malvido, gave details of the company's projects.

The manager directed directly against Latam for its strategy on the internal market. "It makes very aggressive price cuts, which makes it less dependent on the efficiency of each airline, but rather at these prices it is very difficult to make profitable routes"And with regard to international flights, he added:" One competitor put $ 500 in Miami without a suitcase and another offered the same price, but with a suitcase. These are prices never seen. "

As indicated by the company, the system of sending products purchased abroad has already 12,000 registered users. Orders are placed via a platform, they are sent to an address located in Miami, a city where Aerolíneas has two daily frequencies, then they arrive at the airport or at the address of the consumer four days later. For the moment, it is available to private users, but they do not exclude to extend to the business segment. "We explore the possibility of extending it to companies and that it's B2B, "said Máximo Amadeo, sales manager. Currently, the Miami route generates revenues between 100 and 120 million US dollars and it is expected that this service totals 20 million US dollars.

AT the national version, which will work as a separate application from that of the company, only a few weeks of development and point it in August. "The shipment will be done within 24 hours and we are studying alliances with e-mail companies and electronic lockers to determine the sampling points," Amadeo confirmed. Delivery can be made in a warehouse, airports or private homes. These projects do not involve the incorporation of staff because the company plans to use its installed capacity.

Luis Malvido: "In good years, airlines lose money and in the wrong, lose more money"

The President and CEO of the state-owned airline is thoroughly badyzing the company's situation and discusses competition from low cost, operational deficit, the impact of the 2018 devaluation and plans to to increase revenues and develop the market.

"In this competitive environment, we had to develop some skills," summed up the executive at the meeting. For Malvido, the company is competing "successfully because few market shares have been lost". According to the latest report of the National Civil Aviation Administration (ANAC), The company share fell 7 points compared with the first half of last year, while low-cost airlines already hold a 17% market share. With the new application, which required a $ 70 million investment, they hope to accelerate ticket sales by reducing the purchase of 8 to 3 steps.

With regard to the market for cabotage, Airlines companies closed the first half with a 6% increase in the number of pbadengers carried, about 4.8 million. In the meantime, if all the flights are taken into account, the increase is 18% compared to the first six months of 2018.

Consulted by this means on the strategy to follow to compete with low-cost airlines, the director said: "The worst that can happen to us is that pbadengers do not get on our planes, the problem is that later, it will Is $ 500 or $ 2,000, you can see if it's profitable or not. "Amadeo confirmed that during the peak winter season, there will be no discounts or special promotions, but will continue with the plans of 6 installments for international flights and 3 installments for cabotage.

"We have a good high season, but many of these tickets were purchased at aggressive discount times, such as Cyber ​​Monday or Hot Sale, so many of these flights do not even cover their variable expenses," Malvido said. . Therefore, the projects of the company tripling income from non-aircraft products, as may be the activity of the charges or maintenance and technical service, in the next two or three years.