TBY talks to Fernando Guerrero, General Manager of TAME EP, on competition and pricing, the new hub in Quito, and adding international flights.

Fernando Guerrero
Fernando Guerrero studied sales engineering at the Escuela Politécnica del Ejército, followed by an advanced English program for graduates at Texas A&M University, and an MBA in business administration with a specialization in logistics and international commerce at Loyola University in Chicago. His career has included such positions as Manager of Sales and Operations for Challenge Air Cargo (UPS) from 1992 to 1997, Senior Consultant for Deloitte & Touche, and Director of Business and Logistics Project Development for TAGSA-CORPORACIÓN AMERICA in Guayaquil. In addition, he has served as Regional Director of EMSA-SERVISAIR and Director General of Civil Aviation in Ecuador.

What is the importance of TAME for Ecuador's transportation system?

TAME connects the country. If you compare TAME to other airlines in Ecuador, such as LAN or AeroGal—AeroGal belongs to Avianca Group—you will see that TAME's coverage is much wider. Other companies tend to focus on highly profitable destinations, such as the Galápagos Islands. The basic principal of TAME is to fly within our home country. We connect almost 15 different destinations in the country, including the Amazon region, the Galápagos Islands, and coastal Ecuador. We have nine international destinations that connect Ecuador to other Latin American countries and the US. TAME has flights to São Paulo, Buenos Aires, Lima, Panama City, Caracas, Havana, and New York.

Is part of TAME's mission to act as a representative for the country internationally?

There is an interesting development happening all over the world. Larger airlines are disappearing because of the economic downturn. Fuel, pilot training, and aircraft are becoming incredibly expensive. In Southern America, international airlines are leaving the market. They have left a duopoly in the airline sector in Latin America with only LAN and Avianca Group. Recently, Avianca Group started a joint venture with TAM from Brazil. TAME plays a major role in attracting tourists to Ecuador and helping to keep prices competitive. Before TAME launched regular flights to Bogotá, you would possibly pay $800 for a one-hour flight from Quito to Bogotá. In 2007-2008, if you wanted to travel from Quito to Buenos Aires, you would pay $1,500. Today, the prices have reduced considerably—now you will only pay $400 for a flight from Quito to Bogotá—it is half of the price you had to pay before TAME launched this route.

In 2011, TAME became a public company. What was the importance of this transition for TAME?

Before 2011, TAME belonged to the Ecuadorean Air Force. In 2011, it became a 100% state-owned company. The Ministry of Transport, the institution responsible for delivering government policy in the transport industry, has jurisdiction over the company. The Ecuadorean Air Force was focused on offering transport services within the country and didn't consider the international market. Another major change concerns our commercial strategy. The price of tickets is now related to the time you are buying them, and changes if you buy the tickets a day or a month before the scheduled flight. The image and branding of the company has changed, too.

What does TAME do to compete with the duopoly in the airline business?

We have a number of distinctive features. Our key advantage is the connectivity between Quito and the rest of the country. In the summer of 2014, we are establishing a huge hub in Quito. It will stand in line with international hubs in Lima and Bogotá, and will have a very short transiting time of 30 to 60 minutes.

Is New York important addition in the transition of Quito into a hub?

Yes, because currently, the flight to New York departs from Guayaquil, and soon it will depart from Quito. As a part of this strategy, we will also have a flight to Ft. Lauderdale. It is both cheaper and faster to fly there than to Miami, although Miami Airport is convenient for transit passengers. However, there are many flights, and sometimes you need to wait for three hours or more in transit. The headquarters of many major North American airline companies are also located in Ft. Lauderdale.