Dominican Republic, Colombia and Panama: trade triangle for businessmen
The aeronautical entrepreneurs are moving away from the traditional U.S. market and are establishing themselves in Colombia and Panama to promote a new trade and tourism block, with the aim of a tripartite alliance and the establishment of joint strategies to boost the economy of these countries.
“We started because we saw the opportunity to grow in the Dominican market due to the great attraction of Colombians and Panamanians, as well as Dominicans traveling between these countries”, revealed Wingo’s commercial director, Jorge Jiménez.
In his opinion, Colombia and Panama have increased the flow of passengers thanks to the commercialization of direct routes by low-cost airlines. “Establishing new routes is indeed a capital-intensive business, but it has a relevant impact on the dynamization of the economy,” he said.
High prices plus tax rates can be an impediment for people to fly in and out of the Dominican Republic. Given this situation, the launch of a low-cost airline presents an option for budget travelers.
Traffic
According to statistics from the Dominican Central Bank (BC), during January-August 2022, 5,410,076 passengers arrived in Dominican territory. Of this amount, July represented the largest number of people, registering 800,942. This was followed by August (707,236), June (699,523) and April (690,161).
When the data is broken down by region, 2,341,680 passengers came from North America, 937,661 from Europe and 535,678 from South America. The CB analyzes the countries of origin from South America and points out that Colombia sent 151,299 visitors between January-August of this year. Of this amount, 82,649 were women and 68,650 men. Meanwhile, Colombians preferred to stay overnight in hotels (109,324) and short term stays (41,975).
In the first quarter of 2022, non-resident tourists spent US$134.8 per person with an average stay of nine nights. However, during May-June, spending rose to US$140.9, or 4.5% more, even though the stay decreased to seven nights.
In Jiménez’s opinion, the Dominican Republic is a “purely” tourist destination for paisas. “It is one of the three favorite sun, sand and beach destinations for Colombians due to the infrastructure and land connectivity, since from Punta Cana they travel to Santo Domingo to see the city,” he explains.
Air ticket
Given the accelerated growth of this business model, the Civil Aviation Board (JAC) states that lower fares stimulate traffic demand from people regardless of social class and purchasing power who previously did not plan to travel, traveled less frequently or by road.
Jiménez affirms that the multinational knew how to take advantage of the post-pandemic era, an action that is materialized in the occupancy of flights. “People after the coronavirus have more desire to know and not to restrict themselves, and a low-cost airline is the best vehicle to travel because it allows to know several destinations for the same cost in which before we could only know one”, he says.
Wingo will offer tickets starting at US$81 plus taxes. In addition, it plans to mobilize 30,000 passengers per year, distributed in 3,000 seats and two weekly travel frequencies.
Market
In addition to Colombia, the executive understands that Panama is becoming an attractive market for the Dominican Republic due to its business offer. “We believe there is a great opportunity in the Panamanian market, so we will be expanding our flights to that destination,” he says.
The CB indicates that the country received only 12,197 tourists from Panama. In view of this, Jimenez clarifies that his mission is to stimulate tourists from both nations to mobilize passengers to learn more about the Caribbean region.
“Panama is a strategic commercial point in Latin America. It connects the north and south (of the continent), where numerous business and commercial activities are generated, which will stimulate the traffic of convention and business tourism visitors,” he affirms.
To determine the cost of the airfare, elDinero compared prices for one week (October 6 to 13 of the same month), observing that Wingo establishes three fares. The first, for US$75.94 including a bag; the second for US$147.94 with a bag, 20 kilograms of hold luggage and the standard seat.
The last one, on the other hand, costs US$165.94 and has the option of purchasing travel insurance for US$16, among other amenities. These costs increase by US$151.88 with taxes and fees, in addition to the “travelers” fee of US$5, so that for a passenger, this trip would cost a total of US$324.88.
Challenges
Low ticket prices offset operating costs. This is how the commercial director defines the challenges. However, aeronautical entrepreneurs are also faced with spending more than 50% to buy fuel, the devaluation of Latin American currencies -which makes it difficult for them to trade in dollars- and the inflation that affects the population in general.
“By converting the local currency with low rates into dollars, we receive less profit and that is what makes the devaluation affect the business model, an action that challenges us to be more efficient and not to transfer costs to the consumer”, he adds.
