Copa Is Poised to Grow as Latin American Economy Recovers

Copa Airlines CEO Pedro Heilbron talks:

• New routes to the U.S. & Argentina
• What's drawing business to Panama
• New aircraft deliveries in 2018

Latin America's aviation industry shows strength this year—traffic in the region increased 16.1 percent year over year in April, according to the International Air Transport Association—and Panama-based Copa Airlines' corporate travel sector is rebounding, as well, Copa Holdings CEO Pedro Heilbron said. Now, the carrier is preparing to capitalize on that demand. Its first fleet additions in several years are coming next year, and new markets in North and South America are in the pipeline. Heilbron spoke with BTN transportation editor Michael B. Baker.

BTN: How is this year shaping up for Copa?

Heilbron: Latin America went through two slow years and is doing much better right now. The economies have come back. There's GDP growth projected this year and more so next year, so business travel is coming back in our region. Our hub in the Americas, Panama, is very strong, connecting 75 cities throughout the Americas, including the U.S. We serve all the major cities in our regions but also a lot of secondary destinations, so we'll take business travelers not only to the big cities but also to smaller, secondary destinations that otherwise are very hard to get to. We're opening a new destination, Mendoza, in November, which will be our fourth city in Argentina. We continue growing to the U.S. We're opening Denver [in December], which will be our 13th U.S. destination, and around two years ago, we opened San Francisco and New Orleans.

BTN: What have you done that is of interest to business travelers?

Heilbron: We just joined TSA PreCheck. At our hub in Panama, we just inaugurated a Star Gold Track line for immigration and security, a fast lane for departures. Of course, we have our sales force, and we have corporate agreements with some of the major world corporations that do business in our part of the world or are based in the cities we serve. We have a lot of multinationals that have regional offices in Panama, and our hub in Panama is one of the attractions for them. It's a growing number. Every year, there are more international firms, many from the U.S. but also from Europe and Latin America, establishing their regional homes in Panama. The connectivity our hub offers is one of the major attractions, plus favorable tax laws and incentives.

BTN: Have you been growing your sales force in response?

Heilbron: Our sales force has remained stable. We haven't grown it much for the last two years. We actually haven't grown the airline that much. We've stayed at 100 aircraft, mostly 737-800s, in 2015 and 2016 and this year. Most of our growth this year comes from aircraft utilization. We'll be flying our aircraft a little bit more. Next year, we start getting the new Boeing 737 Max 9 aircraft, so then we'll start growing a little bit faster. I'm sure we'll strengthen our corporate sales force, and hopefully we'll offer an improved product.

BTN: Have you determined the layout of those new aircraft?

Heilbron: We're still working on that. We hope to have that ready in the next few months. They're going to fly everywhere, but they'll have better performance and a better payload than our current 737-800s so we'll fly them on our longest routes so we can carry more cargo and more weight. There will be more passengers, so our routes with higher demand, longer routes, will get our new aircraft.

BTN: What have you been doing in terms of improving onboard experience?

Heilbron: Most of our initiatives have been on the technology side: improving our website and our apps. Our new frequent-flyer program, which we launched in mid-2015, ConnectMiles, has reciprocity with MileagePlus from United and other Star Alliance carriers. We're bringing a lot of the ConnectMiles functionalities to our apps. Our onboard experience and product remains pretty much the same. However, we have two years in a row [as] the second most on-time airline in the world and four years in a row [as] the most on-time airline in Latin America. The No. 1 priority for a business traveler is to get there on time and for the flight not to be canceled, and Copa is a world-leading airline in on-time arrivals and completion factors. We also have an attractive business class, with upgrades for our preferred members.

BTN: To what do you attribute that operational performance?

Heilbron: It's company culture. We're very focused on on-time performance and operational excellence. Our team also is very focused and understands our objectives, lives by them and works hard to make them a reality: the way we do our maintenance, we have great maintenance dispatch reliability, [and] the way we set up our hub and our backup aircraft.

BTN: What role does your Star Alliance membership play in your offering?

Heilbron: Star is very important to us because we don't have a plan to serve the whole world. We fly narrowbodies within the Americas. We have no plans to fly widebodies to Europe, but we do need connectivity from other regions. Star Alliance gives us that and gives us access to a network of 28 airlines, thousands of daily flights and millions of frequent-flyers, so it fits very well with our business model of having the strongest intra-America hub but not necessarily having Europe or Asia in our plan for direct flying.

BTN: What have you been doing to grow ancillary revenue?

Heilbron: We auction upgrades. After we've sold our business class seats to paid passengers, then we upgrade preferred frequent-flyer members. If there are any empty remaining available seats, we auction them to passengers in economy class. We hope to begin soon selling certain special seats. We will still offer complimentary seat confirmation for all passengers, but there will be certain more attractive seats with better pitch. Some passengers will get them for free—our frequent-flyers, for sure—but other passengers might be able to pay a difference and get those seats ahead of time.