CCMA, the annual meeting of the Latin American and Caribbean air carrier industry, was held May 10-12 in Cartegena, Colombia.
The meeting is managed by ALTA, the trade asociation that represents this industry. Alex de Gunten, the ALTA Executive Director, opened the meeting with a “state of the industry address,” in which he discussed the positive steps that his members have taken in the past few years.
De Gunten explained that since 2001, labor productivity among ALTA’s members was up 64 percent, sales and distribution costs were down 25 percent, and non-fuel costs were down 18 percent.
Although the revenue per passenger kilometer for ALTA’s members was down slightly, this was actually a positive announcemen, because the drop in revenues for ALTA’s membership was negligible when compared to the drop in revenues for any other part of the world. Mike Franco of Boeing discussed his predicitions for the Latin American air carrier industry. He noted that the growth of the Latin American market has been high in recent years. This may be attributed in part to a growing middle class and to other positive factors found within the Latin American economy. Relative to the rest of the world, Latin America continues to have plenty of room to grow
Juan Jose Flores of Mexicana explained that his air carrier’s relationships with its suppliers are characterized by trust and commitment. He noted how important close relationships were to companies interested in doing business with any Latin American carrier. This was a sentiment echoed by many during the course of the conference. PMA manufacturers wishing to sell into the Latin American market need to understand that personal relationships may be even more important in Latin America than they are in North America. Cliff Kapel, who moderated the PMA Panel at the Conference (and who distributes PMA parts), is a good example of the sort of distributor who has made the investment in close relationships with the purchasers within the Latin American market.
CCMA polled the attendees about their perception of the current state of the world economy. Most people felt that the economy is at or near the bottom point in the current downturn, with 45 percent of the airline attendees and 40 percent of the supplier attendees choosing that option. The remainder of the group seemed nearly evenly split between the propostition that the economy is still deteriorating and the proposition that it has ‘turned the corner” and is already on the way back up. This means that nearly three quarters of the attendees felt that the upturn in the economy was either upon us or just around the corner.
One concern expressed by a number of carriers was concern over credit. Marco Peloggia, Supply Chain Director of TAM, explained that credit has tightened up in the industry. PMA manufacturers looking to break ito the Latin American market may find that generous credit terms may be extremely helpful to their cause, in the current environment.
One intersting wrinkle among the polling being done at CCMA was the result of a question about whether air carriers and suppliers are partners or adversaries in the surrent economy. 63 percent of suppliers and 43 percent of airlines felt that carriers and suppliers are at odds and are not working together to face the current economic issues. This was significant, with much of the remainder in each category feeling that the industry is not working together but that carrier goals and suppliers goals are not at odds.
This last poll suggests that PMA manufacturers looking to break into the Latin American market may meet with more success if they can develop a strategy that clearly demonstrates to the customers the PMA manufacturer’s commitment to developing a coperative relationship in which customer and manufacturer work together to support mutual safety, reliability and financial goals.