WorldCity Business Magazine

Q&A with Rafael Alonso

by Mary Dempsey

When WORLDCITY analyzes U.S. trade data aircraft and aircraft parts surface repeatedly among commodity lists throughout the world. That’s just one indication of how important and competitive the industry is globally. At a time when aviation giants Boeing in the United States and Airbus in France are duking it out, introducing new planes and wooing customers big and small, we talked to Rafael Alonso. The senior vice president for Latin America and the Caribbean is credited with opening the Latin American market for his employer, which had a record year in the region in 2005, posting sales in excess of $3.5 billion.

Who are Airbus’s biggest clients in Latin America?

TAM in Brazil. It’s our biggest operator. We also have Mexicana. It is operating almost 60 Airbuses. And [Central American carrier] Taca and LAN in Chile. LAN operates both F320 family and F340 Airbuses. These two are important customers.

Any others?

Air Jamaica, BWIA. In Ecuador we have TAME. In Mexico, Interjet, which just started operations with F320s. They have four and are receiving three more. They placed an order for 10 additional aircraft. Aerolneas Argentinas, is an important operator for us.

Are these carriers operating only Airbuses or do their fleets contain jets made by other manufacturers, too?

In the case of TACA, it’s only Airbus. In the case of TAM its practically only Airbus, with just a few Fokker 100s. In the case of Mexicana, it’s mainly Airbus. One of the major issues today is commonality. We have 12 different types of planes and they can all be flown by the same pilot. Imagine the savings this represents to an airline, and not just with pilots but also with maintenance and engines.

Airbus’s A380 is the largest passenger jet ever built, a two-deck jet that can seat more than 800 passengers. Don’t airports have to make modification to receive this aircraft?

You’ll have the same load over the tarmac, so you don’t have to reinforce the runways. Maybe you have to round the corners in some of the taxiways. Because of the size of the aircraft, the turning ratio is a little bit difference. But that will be the only small difference. In any case, most of the important airports have already budgeted these modifications.

Will we ever see them in Latin America?

I think there is a market for everything. In Latin America right now, there is not an airline that is ready to take an A380. That doesn’t mean that in three or four years’ time, airlines won’t be looking at it more seriously than now. Maybe flights from Argentina to Europe, maybe Argentina to Madrid. And you will see them into Mexico in three or four years, operated by European airlines.

*What’s happening in the Latin American market? *

In Latin America, we have two very, very important markets. Mexico and Brazil. That’s because of the size of their countries and their economies and their air traffic. Mexico has lots of new low-cost carriers appearing. In the case of Brazil, you also have now a low-cost airline, Gol, that is growing very fast. I’m just sorry that it’s not with our planes.

Are those Mexican carriers buying Airbus jets?

If the startup airlines have the money and financial capability, they are starting operation with new aircraft. Interjet started with four A320s. Another airline, Vuelva, will have A320s delivered next year.

Overall, how do you expect Latin America to perform for Airbus?

In terms of sales, it will grow 10 to 12 percent. It has been like that over the last years. We are successful in that region. But what is important is to see how our market has grown.

And how is that?

Ten years ago, we had 12 planes in operation. Today we have 217 among 14 or 15 airlines. That means 26 or 27 percent of all the aircraft in Latin America today are Airbus.

Is Latin America an important market for Airbus?

It’s between 5 and 6 percent of overall sales.

Is there anything different about selling jets in Latin America as opposed to selling them elsewhere in the world?

Latin American airlines require a lot of dedication on the sales side. Personal contact is very, very important. You need to know the people and deal directly with them, and they have to have confidence in you. That’s one of the elements. Also, the region has some extremely well organized and well managed airlines, such as LAN. In many cases the owners are involved in the management.

What’s the biggest deal you’ve ever done in Latin America?

That was back in 1998, where three airlines tried to get together to buy aircraft at a competitive price. At that time, TACA in Central America was complaining that it was difficult to compete with the big airlines that were placing orders of 100 or 150 planes and getting fantastic discounts. The management of TACA asked me what they had to do to get the same discounts as North American airlines and I told them they had to buy the same number of planes.

So they got three airlines together. Taca, TAM and LAN started negotiating with both Airbus and Boeing, as well as the engine manufacturers. It was a first because the only thing they had in common is that they pertained to the same region of the world. There was no other interlink between them.

What was the final deal?

They placed an order for 100 firm and an option on another 100. It was a big success for Airbus and for the engine manufacturers they chose. The whole thing was done in less than six months. Many people ask why they were able to do that. They were private and they were making money and the owners were involved in the management.

Did it ever happen again?

It was a one-time deal, but the three of them have made repeat orders with us individually.

What is the extent of Airbus’ presence here in South Florida?

We have a quite important training center with several flight simulators in Miami. They are used for training for North American and Latin American pilots and some airlines in other parts of the world. The Airbus facility in Miami has been here since the early ‘80s.

How big of an operation is it?

It’s large. More than 150 people.

And your connection to Miami?

I am based in France, where I have my office. But because of my responsibilities Latin America and the Caribbean region I also have an apartment here in Miami. I pass through here. I spend a lot of time traveling in Latin America.

You’re a Spaniard and an aeronautical engineer. Your job means you’re on the road all the time. How long have you been at this?

Twenty-two years. A lifetime.