JetSMART's CEO, Estuardo Ortiz. Photo: JetSMART/Courtesy

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JetSMART bets on never-flown passenger and ultra-young fleet to revolutionize aviation in South America

Controlled by a US group, the Chilean airline wants to expand destinations across the region

The low-cost revolution in Latin America's air travel

Collection The low-cost revolution in Latin America

This is the final call for real change in the region's air sector

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Gustavo Ribeiro

01.Dec.2019 07:54 BRT
UPDATED 13.Mar.2020 10:40 BRT

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JetSMART‘s plan is ambitious: revolutionize aviation in South America. It may even sound presumptuous from a low-cost Chilean airline that first flew in 2017 and has 15 airplanes in its fleet. However, when you look at who is behind it, you realize that this is not crazy. They are the Indigo Partners, a US investment fund that controls not only the Chilean airline, but also the United States’ Frontier Airlines, Mexico‘s Volaris and Hungary’s Wizz Air, and which invested 59.5 billion euros to buy 430 Airbus aircraft in the largest purchase of equipment in the history of commercial aviation.

“When we started the JetSMART project, we were very clear about what we wanted to be and how we expected to impact the industry. We always talk about making a revolution in South America’s aviation. That’s what we are doing,” says the company’s CEO, Estuardo Ortiz.

And the revolution has begun. In less than three years of operation, the company has exceeded 4 million passengers and flies to 23 destinations in Chile, Argentina and Peru, and will soon land in Brazil and Colombia.

ALSO READ: Low-cost airlines overcome barriers to grow in Latin America

The company was born with the same DNA as the Indigo Partners’ sisters, based on an ultra-low-cost model where passengers have the freedom to choose what they want to pay in addition to the fare, such as baggage check, seat booking or in-person check-in. Coupled with this, a modern fleet ensures more economy in operation and fuel consumption.

Low cost does not mean low quality. We don’t sacrifice quality
Estuardo ortiz, CEO at JetSMART.

This model allows the company to offer fares under $ 10 on various domestic segments and to attract passengers who have never boarded an airplane. By the way, this is the focus to keep growing. “We are looking for a market that doesn’t exist yet. We do not think of people who already travel by plane, but of those who do not travel by plane. We are not looking at the air market, but the transportation market”, continues the JetSMART’s CEO.

This means offering routes that other airlines do not offer, including fleeing major airports. For JetSMART, it makes no sense to fly from Arica to Antofagasta, both in northern Chile, and make a connection in Santiago. Or go from Mendoza to Neuquen with a stop in Buenos Aires.

It was precisely this thought of decentralization that led the company to operate in Argentina’s domestic market. According to Ortiz, the country flies very little and has huge opportunities and potential. From April, when the flights began, until September, it carried more than 285 thousand passengers and already has a 3% share of the internal routes.

The animals that move growth

JetSMART planes are virtually unmistakable. In addition to the fuselage logo, there is a feature that sets them apart from other airlines in the region. On all planes there is the image of a typical South American animal painted on its tail, whether large or small birds or felines, penguins and deer. And animals are what should not be missing for the company in the coming years.

Today JetSMART flies 12 aircraft in Chile and three in the Argentine subsidiary, all 186-passenger A320 Airbus planes received directly from the Toulouse plant, in France, giving the company’s fleet an average age of less than a year and a half, the youngest on the continent.

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In early October, the company received the first A320neo, a new generation aircraft that consumes 20% less fuel than the previous version. It will be joined by another 55 in the coming years–six of them by the first half of 2020–making it the flagship equipment of the company’s fleet. The $ 8.4 billion investment still includes 14 A321neo, with even more seats. In total, between direct orders and leases, JetSMART aims to reach 104 aircraft over the next seven years.

A A320neo airplane from JetSMART's fleet. — A A320neo airplane from JetSMART’s fleet. Photo: JetSMART/Courtesy

And while the A320neo is the fleet standard, another plane will allow the company to fly farther, literally. It is the A321XLR, the long-range version of the A321neo. JetSMART will be the first company in Latin America to receive the aircraft from 2023. The A321XLR can carry up to 244 single-class passengers and fly 8,700 kilometers, giving the possibility of connecting South American cities to the United States and even Europe, departing from the Brazilian northeast region.

“The A321XLR is the plane that we hope will be part of the air transportation revolution we are making. Today, many routes are only flown by traditional airlines. The low-cost model did not have until then aircraft that could compete in these markets. There was not a plane with sufficient range. The A321XLR will deliver this at a low-cost airline”, celebrates Ortiz.

Brazil: the next step

After Chile, Argentina, and Peru, the next frontier for JetSMART to break through is Brazil. And it’s not just any destination. For the company, the country has the most potential and market size to be explored. The first destinations from Santiago will be Salvador (December), Foz do Iguaçu (January 2020) and Guarulhos/Sao Paulo (March 2020). The new A320neo will perform the flights.

JetSMART’s operation in Brazil was only possible after recent changes in air transport regulations that allowed airlines to charge for baggage clearance, which is paramount for low prices. And precisely because it is still an unusual model in the country, the company wants to feel the environment before offering more routes.

Let’s see how the Brazilian market responds to a low-cost airline. For now, the response has been quite positive. But let’s wait a few months to see how this trend continues and to see if we grow even more in Brazil
ESTUARDO ORTIZ, CEO AT JETSMART.

Nevertheless, revolutionizing aviation in South America means having a strong presence in Brazil. Not only with international flights, but also in the domestic market. With the change in Brazilian law that allowed 100% foreign ownership in airlines, there is no legal impediment for JetSMART to open a subsidiary in the country, just as it did in Argentina. With so many airplanes ordered, Argentina and Chile can get small.

The company’s CEO does not rule out this possibility in the future. “We are very much focused and we like things well done and at the right moment. We’ll see if there will be a time to operate more than just international flights. For now, the focus is on the operation between Brazil and Chile”, concludes Ortiz.