Price Wars
The Competition for Getting People to and from Roatan got Fiercer

November 11th, 2011
by Thomas Tomczyk

[private]

A plane is tended to by grounds crew at the Roatan airport

A plane is tended to by grounds crew at the Roatan airport

Consumers traveling between La Ceiba and Roatan have waited for this for years. After Atlantic Airlines went under just three years ago, the only airlines flying between La Ceiba and Roatan were IsleƱa and SOSA. Now the competition, selection and frequency have grown and the price has fallen. While just two months ago the flight to La Ceiba cost Lps. 900, now travelers can fly to La Ceiba for Lps. 500.

“Within five days they [competing airlines] dropped their prices,” said Dorn Ebanks, provisional CFO of Easy Sky, the airline that began the price war on September 9, with its maiden flight from Roatan to La Ceiba. Even Galaxy Wave, the ferry operating the La Ceiba to Roatan route, reduced its prices from Lps. 500 to 400 in order to remain competitive with airlines.

According to Jesus Correa, Easy Sky’s Chief Operations Officer, Sky has transported 6,200 people in its first month of operations. “That’s 62 percent occupancy,” says Correa adding that Easy Sky transports 10,500 people in a month. “We make money in volume,” explained Ebanks. “It’s the low cost airline model from Europe.”

Easy Sky is using a 120-seat Boeing 737 jet. According to Ebanks the plane was built in 1997 and has 83,000 flying hours left in its fuselage. The 40-mile, 10-minute flight between Roatan and La Ceiba doesn’t put much engine use on the plane. At the current rate of 22 hours a month, the plane could theoretically continue its twice-daily service for another 300 years. The company is already looking at bringing in another 737 in November to service a lucrative Tegucigalpa-San Pedro Sula route.

Easy Sky entered the market on Roatan by purchasing a 90% stake in Central American Airways [CAA], an airline that after initial success fell into trouble when one of its planes crashed in Tegucigalpa killing 14 people. “The aircraft was caught in a microburst as it approached for landing. The accident was weather related,” said Ebanks, owner of CAA, explaining that the information came from a preliminary report released about the accident.

Ebanks says Easy Sky was looking to enter the Central American market and approached the struggling CAA. The acquisition was a way out for CAA and a great way for Easy Sky to enter Central America. “To get an airline operating certificate [in Honduras] it takes 24 months. Getting counter space at the airport takes more time,” said Ebanks about Easy Sky, which automatically benefited from a 10-year income tax exemption brought in from CAA. Ebanks declined to reveal the owners of Sky, but said that “the parent company is based in Europe.”

According to Ebanks Easy Sky already flies routes in Mexico and Columbia and eventually wants to open a route three times a week between Tegucigalpa and San Andres, Columbia. The Columbian island has frequent flight to Columbia and could serve as an alternative way of traveling between Central and South America. “We have operating permits for Honduras, Nicaragua, Guatemala and El Salvador,” says Ebanks.

Currently Roatan has airlines offering direct connections not only with La Ceiba, but also with San Pedro Sula, Tegucigalpa, Utila and soon Copan. In another expansion bid, scheduled for December 17, Easy Sky is planning to open a weekend international route–Roatan to Fort Lauderdale. The round-trip, 154-passenger MD-83 flight is estimated to cost $550 roundtrip.

The question remains regarding what will happen to airlines like SOSA which use smaller, less efficient planes between La Ceiba and Roatan and which are matching prices with Easy Sky. “They will end up flying to Utila, Guanaja, La Mosquitia,” says Correa. “We are not interested in those destinations.”

SOSA is a Honduran family-run airline that was launched 35 years ago. While SOSA flies between Roatan and La Ceiba three to four times a day and has five planes, its biggest one can take only 50 passengers. Josue Martinez, a SOSA operations manager on Roatan, says that while relations with Easy Sky on an operational level are cordial, the attitude of the owners is quite another thing. [/private]

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