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Brazil and Peru

Jetsmart uses competition’s weakness to expand

The Chilean low-cost carrier sees great opportunities in the Coronavirus crisis. Armed with fresh capital, Jetsmart wants to expand into Peru and Brazil.

The era of low-cost airlines began in the 1970s with Southwest Airlines in the United States. In Asia and Europe, the no-frills carriers started almost thirty years later, but have since become indispensable and hold big market shares. In South America, by contrast, it took a little longer, especially in Chile.

After Sky Airline converted itself into a budget airline, the low-cost airline group Indigo Partners (Wizz Air, Frontier, Volaris) also saw an opportunity in Chile. The investment company founded Jetsmart in 2017. Today, the airline is number three in the country with a fleet of 17 Airbus A320s and a market share of around 12 per cent.

Money for «expanding into new markets»

That Jetsmart is looking beyond Chile was already evident last December. At that time, Norwegian Air Shuttle gave up its plans in Argentina and sold the Argentinean subsidiary to Jetsmart. And the company now wants to use the Coronavirus crisis to expand even more vigorously. After all, Avianca and Latam, the continent’s two main airline groups and competitors, have been hit hard and are both stuck in Chapter 11 bankruptcy protection filings.

Jetsmart has increased its capital by 6 billion Chilean pesos, about 7.8 million in US dollars. «This will undoubtedly allow us to have the working capital necessary to achieve the goals we have set ourselves, including expanding into new markets», the company commented, according to newspaper El Mercurio. The airline had previously mentioned Peru and Brazil as expansion targets, as well as Colombia.

Peru starting in 2021

Jetsmart already flies to Peru. After the withdrawal of Avianca and the shrinkage of Latam Peru, Jetsmart sees good chances there. A new Peruvian subsidiary is scheduled to start as early as 2021.

The Chilean low-cost airline has been planning to expand in Brazil for some time. In September last year, it had already received permission to operate flights from Chile and Argentina to South America’s largest country. Furthermore, Jetsmart is aiming for domestic flights.

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