Air Transport World

Iberia's southern empire: Spanish airline's Latin American/Caribbean strategy aims away from the coming European megacarrier battles. (includes related article about Spanish-Latin American relations) (company profile)

When executives in Madrid talk of Hispanoamerica or Iberoamerica, it's not without a measure of self-confidence. To the management of Spain's national carrier, Iberia Lineas Aereas de Espana, S.A.-which already serves 18 Latin American/Caribbean points-the words reflect a deeply felt ethnic and cultural affinity that the carrier is bent on parlaying into profitable synergies. After years of hardly any foreign investment to speak of under the dictatorial Franco regime, Spanish enterprises in general and Iberia in particular are beginning to invest heavily in South America. The carrier's planning for the future is firmly focused: "It's just a case of the shoemaker sticking to his last," explains Miguel Aguilo, chairman and CEO. "We want to consolidate ourselves in a market in which we will be the biggest European investor."

For the "new," restructured liberia, the bottom line is survival. Facing unequal battle in an emerging age of megacarriers and European Community air-travel liberalization-that also threatens its monopoly on domestic air routes and airport ground services (29% of 1990 revenue)-Iberia is banking on wide-ranging expansion of Latin America and the Caribbean as the loss-making airline's ace in the hole.

Even though the prospects for traffic growth in that part of the world may seem relatively modest, Iberia executives agree that the carrier has few viable alternatives but to build up its Latin connection. As Arturo Cardelds, CEO of iberia's Intercontinental Division, puts it: "Europe is Europe; the die is cast. You may open up Eastern Europe, you may increase frequencies but except for small shifts, here and there, the pie is already divided."

In terms of total number of passengers carried last year-15.5 million-the carrier ranks as Europe's fourth-largest after British Airways, Lufthansa and Air France. Based on its 22.1 billion revenue kilometers flown in 1990, it is fifth. Whether the airline will be able to maintain its competitive position, however, remains an open question.

Miami has become a linchpin in lberia's broad strategic planning, with the granting last june of surprisingly generous route concessions by the U.S. Transportation Department, including the right for Iberia to operate a Miami minihub. Iberia won the unprecedented authority to base at least four aircraft there for a feeder service linking its Madrid-Miami route with points in Latin America and the Caribbean.

That its increasing clout in Latin America serves to make Iberia a more lucrative partner for eventual alliances-and possible share swapping-with one or more other European airlines also is part of the ambitious strategy for measured global expansion mapped by soft-spoken Aguilo. …

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