Six questions to Estuardo Ortiz, CEO of JetSMART
Noticias Airbus sat down with JetSMART CEO Estuardo Ortiz to learn more about the latest South America low-cost airline.
1- Q: What made you decide to launch JetSMART in Chile, a relatively small market in which two strong and established airlines already operate?
A: “We chose Chile because, without a doubt, it offers the best platform in the region for success. Chile has a healthy history of economic growth and political stability, an enviable legal system, a fair and equitable regulatory system, and governments that support trade and foreign investment, regardless of party affiliation.
“Furthermore, our hope is that we will expand the size of the Chilean and regional air travel market and we believe JetSMART will be a great compliment to today’s air travel landscape in Chile.”
2- Q: The competition is reacting by reducing fares – how has this affected your plans?
A: “As I mentioned, we expect to give an evolution and revolution to the air travel industry-- to make it grow, bring forth new passengers who have never flown, and make air travel affordable and available to all Chileans. We are not targeting our worthy and successful competitors but instead we aim to attract passengers who otherwise would not fly because of cost or convenience. Our product is safe and reliable, and our ultra-low fares will always reflect our commitment to expand air travel to all Chileans.
“With JetMSART, we launched a new endeavor that will democratize air travel by bringing the ultra-low cost model to all Chileans. Many people nowadays travel by bus because they have no other option, but with JetSMART new flyers can enjoy air travel in Chile. This is why we have created the program “Nuevos del Aire,” which seeks to reward those who have never flown before and decide to do so with us.”
3- Q: There was a lot of media attention around the $1.50 fares you were offering when you launched. Obviously this was a promotional fare, but how do you manage to keep fares low when there are so many costs out of your control such as taxes and airport fees?
A: “When we started the ticket sales through our website it was a great success. In particular, our promotional offer “Vuela a luca,” was extremely successful, and we sold over 25,000 tickets during the first few days—more than half of those were selling at only CLP 1,000 (USD 1.50) plus airport fees and taxes. Our commitment is to always have ongoing promotional offers at prices that will encourage passengers to fly and will make flying simply irresistible.
“However, our promise of low prices doesn’t only come with having enticing promotional offers. The essence of JetSMART comes from being a truly low-cost airline based on a highly-efficient cost structure that allows us to sell low fares and allows you to only pay for what you use. Your ticket will only include your one-way transportation from point A to point B, and you can decide on the services you need or don’t need. Only paying for what you want is a transparent and easy way to choose your preferred seat, baggage requirements, or needs for priority boarding.
“But of course, the low-cost model could be fostered by the improvement of the air transport industry’s conditions. For example, it is important that the airport fees are included in a proportion of the price of the ticket. The objective is to align all interests so that the Chilean market has more and more people accessing air travel, and low cost companies such as JetSMART could work to achieve this. The effort to reduce other costs such as airport fees is also necessary.”
4- Q: Why do you believe there have been so many new LCC entrants in the region over the past year? What has changed in the market?
A: “In the last 30 years the aviation industry has experienced a significant change with the appearance of low-priced airlines. In Europe, low-cost airlines account for 40 percent of all air travel. By 2034, low-fare operators are expected to account for 21 percent of the world market. The region clearly needs a reliable, professional, and safe Ultra LCC and that is exactly what JetSMART’s mission is all about.
“Drawing upon the experience of Indigo Partners in the development of this model all over the world has proven that the model works and that it stimulates the market size substantially. We are here to expand the market and give millions of passengers in the region access to air travel. According to our research, only seven percent of total passengers in Chile travel by plane, so there is plenty of opportunity for us.”
5- Q: You have chosen the A320 as your aircraft of choice. What influenced this choice? What does the A320 bring to you?
A: “JetSMART operates brand new Airbus A320s with state-of-the-art technology and world-class standards. We have had positive results flying the A320 in the region and it offers us exactly what we need: reliability, cost-efficiency and world-class performance. We truly believe we can build a successful ULCC with the support of Airbus.
“We already received our second A320 and by the end of 2018 we plan to reach nine aircraft.”
6- Q: What does the future have in store for you? Are there any plans for the next JetSMART?
A: “Currently JetSMART operates routes to eight cities in Chile: Santiago, Concepcion, Puerto Montt, Temuco, La Serena, Copiapó, Calama and Antofagasta. JetSMART also focuses on intra-regional routes –what we call “SMART Flights”-- which increase connectivity and productivity by connecting, non-stop, Concepcion and Calama; Antofagasta and Puerto Montt; as well as Antofagasta to La Serena. We plan to add more domestic destinations before year-end and we also expect to fly to other countries very soon. Our next endeavor is launching international service to Peru which will come soon. We look forward to continuing to give good news… because for us, this is just the beginning.”