Flybondi, which stands for “Flying Bus” roughly translated from local Spanish slang, is trying to do what no other has done before – building a new airline in Argentina without government ownership or foreign airline investment. But this tale isn’t one of constant success with the airline facing challenges such as the Coronavirus, local competition, and even its home hub airport being shut down. This is the Flybondi story.
How did they begin?
Flybondi began as a dream to bring ultra-low-cost-flying to the vast country of Argentina. The countries aviation sector had been stagnating for a period of years with too high fares and limited seats. The government decided to deregulate the industry much like the aviation deregulation of the US in the 80s as well as neighbors Brasil and Chilie – both of which had seen their airlines prosper.
Enter Flybondi. Originally put together by a local businessman Gaston Parisier and airline entrepreneur Julian Cook who created Switzerland’s FlyBaboo, this new carrier would operate on the model of Frontier in the US or Wizz Air in Europe. Ultra-low fares with no frills, essentially a ‘flying bus’.
Flybondi completed a seed capital round in August 2016, with the participation of various foreign and local investors. The airline would secure an additional $75 million US for its startup operations.
What was their strategy?
The carrier would operate from a single hub in the capital city of Buenos Aires, with a fleet of either Boeing 737s or Airbus A320s (they would go onto lease five Boeing 737-800s) and 25 airframes by 2021. Route selection would be domestic neighboring cities for the first 18 months, before moving onto international routes (throughout the South American continent).
“We are delighted to welcome this B737-800 as the first aircraft in our fleet and the start of our next phase of launching the airline,” said Julian Cook, CEO of Flybondi said to Avipeo.com. “This is an exciting time in the development of our airline and we look forward to serving our future customers with this aircraft. We also look forward to working with and growing our relationship with SMBC Aviation Capital into the future.”
The airline would also have its own ground handling staff to ensure low costs throughout the supply chain. For pilots, the airline negotiated higher hours from unions but with a higher pay per hour, meaning more sectors and more profit, without taking advantage of pilots.
Right from the start, Flybondi ran into resistance. Its chosen hub, Buenos Aires El Palomar, was sued by local residences who opposed the airstrip operating commercial flights (Flybondi was the first to operate regularly scheduled service). A judge ruled in favor of the residences, which limited the number of flights to only three per day – forcing Flybondi to cancel up to 72 flights. It took a month of hard legal leg work to get the rule overturned but it was worth it, Flybondi could now fly 24 hours per day into its hub airport.
At the same time Norwegian Airlines, the low-cost carrier famous for taking on British Airways on the London to New York route, decided to enter the market with its own small fleet of four Boeing 737s. This would be the main competition to Flybondi (as well as jetSMART who would launch routes to Argentina) but they were confident that their home ground advantage would win them, customers.
However, while the airline had plenty of demand, the falling economy of Argentina started to take a bite out of its revenue. In January of 2018, the airline’s costs were on an exchange of 17:1 USD (the airline paid in USD to its foreign aircraft lessors), but by November the exchange rate had fallen to a shocking 35:1 US.
“70% of our costs, and for aviation in general, are in dollars. In these costs, we factor in fuel, aircraft leases, spare parts, among many others. It was something we did not expect and we have felt,” said airline chief executive Julian Cook to CH-Aviation. “Flybondi planned to have eight aircraft by the end of 2018 but will remain with the current five. In the coming months, we will see how the economy stabilizes and then re-evaluate our fleet expansion plans,”
To compensate, the airline would pause expansion plans and instead maintain the course to monitor profitability.
The impact of the coronavirus
In 2019 the biggest problems that Flybondi faced were increased competition, and its hub airport losing the right for 24-hour flights. This would be, however, the least of their worries in the next 12 months.
In an effort to prevent the Coviid-19 virus from spreading across the country, the government chose to shut down operations and close all major airports. With demand at an all-time low, the aviation authority then made moves to shut down several airport facilities across the country to curb on costs and centralize operations – including removing access for commercial services at Flybondi’s (and JetSMART’s) Buenos Aires El Palomar – which you can read all about here.
“[The government] asked to take the flights to Ezeiza, where the low-cost model is not viable because you double or triple the costs. Not only in taxes – our passengers would have to arrive by bus or train. For Ezeiza, the taxi costs the same as our tickets,” Flybondi president Esteban Tossutti protested.
To save on costs, the carrier returned three of their aircraft back to the lessor and sent the other two Boeing 737’s for essential MRO service. According to the CH-Aviation database, the airline now only has a single Boeing 737 aircraft for which it can use to resume services by December from a different airport. The airline originally planned to operate international routes by December as well, but it has been forced to delay.
“Lamentably, due to the constant lack of operational, regulatory, and commercial definitions that are essential for planning in the airline industry, we took the decision to postpone the restart of our international operations, and we will begin flying from July 2021,” it said in an email sent to a passenger.
What does the future hold for the airline?
Flybondi has faced challenge after challenge, facing off the national carrier in a market that has proved to be one of the toughest in the world. But this hasn’t stopped them from trying to bring low-cost flying to the citizens of Argentina.
“With our airline, air connections were democratized; grandparents, families, and students could travel by plane,” said Tossutti, a message that best represents the mission of Flybondi.
From here the airline faces a humble return to service, slowly expanding out domestic services from its provisional airport Buenos Aires Ezeiza (continuing to face courts to reopen its Buenos Aires El Palomar base), reopening international routes, and once again expanding its fleet. Eways Aviation wishes them the best of luck, but from their track record, we know that Argentina’s homegrown carrier will rise once again.