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Pluna and Jazz look to bring CPA model to South America

posted Nov 16, 2010, 11:25 PM by Rowan Hewitt

By Brendan Sobie



Uruguay's Pluna is in talks with several South American carriers about operating Bombardier CRJs under potential capacity purchase agreements (CPAs).

Pluna president Matias Campiani reveals Pluna and its new strategic investor, Canada's Jazz Air, have recently visited large South American carriers interested in hiring Pluna to operate CRJs. Pluna currently owns a fleet of 10 90-seat CRJ900s, but Campiani says the carrier would likely acquire 50-seat CRJ100/200s if it begins operating aircraft outside its own network.

"We're looking at creating a new division in Pluna to do what Jazz does - CPA. It's a model that hasn't made it down here yet. No one is offering it. We see potential," Campiani told ATI and Flightglobal sister publication Airline Business in an interview last week. "Right now were looking at CPAs as a way of growing."

CPAs are the bread and butter of regional carriers in North America and Europe but in Latin America all regional carriers have independent operations and do their own sales and marketing. Pluna has been following a low-cost independent regional carrier model since it was privatised in 2007. Previously a point-to-point flag carrier operating Boeing narrowbody and widebody aircraft, Pluna now only operates CRJ900s, offering a connection product via Montevideo to 11 destinations in Argentina, Brazil, Chile and Paraguay.

Earlier this year ATI reported that Pluna was looking at acquiring second-hand CRJ200s in addition to three additional CRJ900s as part of the next phase of its expansion strategy. Pluna over the last two months has taken delivery of the three additional CRJ900s but has not yet committed to taking any CRJ200s.

Campiani says he still sees potential for Pluna to use CRJ200s to bolster frequencies on some of its thinner routes and open new secondary destinations. But he says the requirement for 50-seaters in Pluna's own operation is too small to merit investing in the second type and CRJ200s will only be added if Pluna can also operate aircraft under a CPA arrangement.

Also earlier this year, Jazz acquired minority stake in Pluna from Campiani's Leadgate investment firm, which acquired 75% of Pluna from the Uruguayan government in 2007. Campiani says in addition to helping fund the now completed expansion of Pluna's CRJ900 fleet, Jazz is providing Pluna with technical and strategic expertise.

On the technical side, Jazz has helped Pluna establish a heavy maintenance capability for its CRJ900 fleet which was introduced last month when Pluna completed its first CRJ heavy check. Jazz has extensive experience operating 50 and 70-seat CRJs and could help Pluna source CRJ100/200s if Pluna decides to add the type to its fleet. On the strategic side, Campiani says Jazz is now helping Pluna develop the CPA model.

Campiani says Pluna still sees opportunity to further grow its Montevideo hub, which is now being expanded using the three newly delivered CRJ900s. But Campiani now believes that when it comes to expanding Pluna outside Uruguay there is more potential via the CPA model.

Leadgate had previously envisioned expanding Pluna across the region by opening new mini-hubs in other countries, targeting smaller markets that larger aircraft cannot viably serve. But Leadgate has discovered this strategy has its challenges due in part to regulatory constraints.

Leadgate last year targeted Argentina as its second market for applying its independent regional carrier model and acquired a majority stake in AeroVIP, a small Argentinean regional airline which ceased operations in 2004. With Leadgate pumping in new funds, AeroVIP was re-launched a year ago with one CRJ900 leased from Pluna. But AeroVIP has repeatedly failed to secure rights to operate scheduled flights, forcing it to only operate charters, which severely restricts its potential growth