Miami.- There’s a new regional player in Latin American aviation: Arajet, a
low-cost company started in the Dominican Republic in September 2022
which now flies to 23 destinations in 16 countries in North, Central and
South America.
Bain & Co and alternative asset management business Griffin Global Asset
Management are financial partners while the Boeing Company and
France-based Vinci Airports are strategic partners.
Bain and Griffin are investing $3 billion in Arajet over a five-year
period, Chile-based, Latin America business magazine America Economia
reports.
The new carrier faces competition from Latin America’s top two airlines
Chile-based LATAM and Colombia-based Avianca as well as Panama-based
Copa.
“There is a land grab — or air grab, if you prefer — in Latin America
generally now between the various carriers,” Mike Arnot, an analyst at
Cirium, told the Financial Times in June. “Every player sees
opportunities to add capacity.”
Arajet’s CEO and founder Victor Pacheco said he studied 100 airline
failures in the Caribbean to learn from their mistakes. The new airline
is unique for two reasons, he argues. First, it’s not based on taking
away passengers from existing airlines, but creating new passengers.
Second, unlike most other low-costs in Latin America (which typically
serve domestic markets), it flies long distances.
“If we … compare the market share of the competitors, we see that they
have not been impacted in terms of the number of passengers flying in
their airlines,” Pacheco tells America Economia. “You can even see that
they have been growing slightly. So we have not entered the market to
take their clients. We have stimulated new clients and we are managing
to captivate that new clientele to fly on Arajet.”
These days it’s become common to hear about middle or lower-class
Dominicans who have never flown before enthusing about their recent trip
to Medellin, Colombia.
Arajet also flies to destinations like Argentina, Brazil, Chile, Costa
Rica, Ecuador, El Salvador, Guatemala, Mexico and Peru and Caribbean
islands Jamaica, Aruba, Curacao and Saint Martin. It is waiting for
approval to fly to the United States, Uruguay, Paraguay and Bolivia.
Among Arajet’s latest connections to start is Canada, where the carrier
last month inaugurated flights to Toronto and Montreal from Dominican
capital Santo Domingo.
“Arajet …establishes Santo Domingo as an exciting new hub on the
continent for Canadians, connecting them to more than 10 countries in
the Americas, such as Brazil, Argentina, Chile, Curacao, Aruba, and
Colombia, with a low fare airline that does not compromise on customer
service and experience,” Pacheco said at a ceremony in Toronto marking
the new connections.
Arajet hopes to replicate the success of Panama’s Copa in using a hub to
connect passengers throughout the Americas.
The airline transported more than 500,000 passengers this year and
Pacheco expects 1.5 million next year when the airline gets approval to
fly to US destinations. It is currently waiting for approval from the US
Federal Aviation Administration to fly to New York, Miami and Puerto
Rico.
An estimated 2.4 million people of Dominican Republic origin live in the
US and visitors from the United States typically make up about 50% of
total inbound passengers and flights, according to data from Pew
Research Center and the Dominican Tourism Ministry quoted by
FDIintelligence.
Arajet’s goal is to reach seven million passengers by 2028 using 40
planes.
Thanks to Arajet’s lower prices, Pacheco believes prices have gone down
among other airlines in Latin America.“The region needed Arajet,” he
told FDIintelligence.
As a result of its strong growth and significant potential, Arajet has
been named Company of the Year by Latinvex.
By: Latinvex Staff