Journal of Commerce / January 25, 2000
By Larry Luxner
SAN SALVADOR, El Salvador -- Grupo Taca, one of the fastest-growing airlines in Latin America, on Tuesday inaugurated five Airbus A300 cargo planes at the company's headquarters in El Salvador.
Following a traditional blessing of the jets by a Salvadoran priest, Taca's executive president, Federico Bloch, said his airline's $100 million investment in the project "is a clear demonstration of confidence in the growth of air cargo in Central America, an activity in which besides offering quality service has generated 500 jobs."
El Salvador's minister of economy, Miguel Ernesto Lacayo, told reporters his government applauds Taca's investment "because the economy of the region will benefit strongly from the export industry, above all in non-traditional products." He added that "Grupo Taca has contributed immensely to Central American regional integration and the strengthening of commercial links among countries, an activity in which Taca has set an impressive example."
Tuesday's inauguration ceremony is the culmination of a recent decision by Grupo Taca to establish its own all-cargo fleet after years of carrying cargo on passenger flights and rented cargo planes. The conglomerate -- formed by Costa Rica's Lacsa, El Salvador's Taca, Guatemala's Aviateca, Honduras' Taca and Nicaragua's Nica -- serves the Central American cities of San Salvador, El Salvador; San Jose, Costa Rica; Managua, Nicaragua; San Pedro Sula and Tegucigalpa, Honduras; Panama City, Belize City and Guatemala City.
In 1999, the airline moved 163 million pounds of cargo between the United States and Central America, a number projected to jump to 251 million pounds this year, according to Taca's cargo marketing coordinator, Juan Jorge Villarreal. Of that total, 98 million pounds will be flown from Miami southbound, while 108 million pounds of cargo will be sent from Central America northbound. The remaining 134 million pounds correspondents to other markets in South America, Mexico and the Caribbean.
Most of the growth this year is being driven by an explosion in garment and electronics exports, particularly in Honduras. Air-cargo traffic in and out of San Pedro Sula, for instance, is rising by 32% a year and shows no sign of slowing down.
"The Honduran government gave tax incentives to the maquilas in order to create jobs, and that's enabled them to export much more than before," said Villarreal, adding that in 1999, Taca had a 47% share of the air-cargo market in and out of Central America. Taca's major rival was Challenge-UPS, with a 45% share, followed by Fine Air, Antillas and smaller carriers, with the remaining 8%.
Inbound, Taca's most important market is Costa Rica ($38 million in cargo revenues last year), followed by Guatemala ($18 million); El Salvador ($12 million), Nicaragua ($8 million) and Honduras ($3 million). Outbound, its leading market was also Costa Rica ($34 million), followed by Guatemala ($20 million); Honduras ($16 million); El Salvador ($10 million) and Nicaragua ($5 million).
Taca's main cargoes northbound are garments, cut flowers and specialty fruits, while southbound, the most important shipments are consumer goods, small appliances and electronics.
Julio Flores, Taca's vice-president for cargo, listed U.S. manufacturers Intel, Sara Lee, Fruit of the Loom, Hanes and Levi's among the airline's leading customers.
The five Airbus Industrie A300 jets -- once used by Alitalia to ferry passengers to and from Italy -- are based at Miami International Airport, following their conversion by British Aerospace PLC in Bristol, England. Taca acquired the Airbus jets in a lease from the JHM consortium, as part of a corporate overhaul.
Each of the reconfigured jets can carry up to 95,000 pounds of containerized cargo, or 140,000 pounds of volume within their 11,000 cubic feet of space. Taca says the Airbus A300 is ideal for its purposes, since the aircraft can be unloaded in 30 minutes and loaded in 60 minutes, requiring a total of one and a half hours -- a factor that'll help keep operational costs down.
This year, Taca projects total cargo revenues of nearly $90 million, including $68 million from the five new all-cargo planes; $14.4 million from cargo carried in the bellies of passenger planes, and $7 million from wet-lease arrangements with Air Jamaica and BWIA, by which Taca carries cargo to Montego Bay and Kingston, Jamaica; St. Thomas, U.S. Virgin Islands and the Caribbean islands of Barbados and St. Lucia.
Scott Dickson, vice-president of planning and income administration, said that $90 million represents between 10% and 15% of Taca's overall 2000 revenues.
"Last year, it became very apparent that transporting belly cargo was not efficient," Dickson told The Journal of Commerce. "Air cargo in Central America is an enormous business, and one of the problems the incumbents, like Challenge and Fine Air, had was that they were operating narrow-body freighters. It's not so much the weight, but the volume, i.e. textiles and machinery, that don't fit in the cross-section of a DC-8. So we saw a clear opportunity for profits by entering into the all-cargo market. At the same time, the A300 came on the market as a cargo plane. It offered us the opportunity to carry not only substantial loads -- up to 95,000 pounds -- but also the volume we needed, so it gave us a competitive edge."
Taca, an acronym for Transportes Aereas Centro-Americanos, began in 1929 with a single cargo route between San Pedro Sula, Honduras and New Orleans. Today, the airline has nearly 200 employees working exclusively in cargo.
While most free-zone exports leave Central America by boat -- mainly through Puerto Cortes, Honduras, and other Caribbean ports -- some items like high-value fashions, microchips, cut flowers, shrimp and other seafood must go by air.
"Free-trade zones account for 70% of the products we send by air," said Jose Ernesto Vides, Grupo Taca's cargo manager for El Salvador and Belize. "Our rates are higher, but we try to give the best service in the industry. People prefer to fly with Taca, even though it costs 2 cents per pound more."
In addition to garments and other paying cargo, Taca last year also shipped 62,000 books to El Salvador and Honduras free of charge for DARE, an anti-drug organization based in Los Angeles. It also flew 100,000 pounds of wheelchairs to El Salvador at no charge, as well as 92,000 pounds of foods, medicines and other humanitarian assistance to Venezuela, in the wake of that country's devastating December mudslides.
In the short term, Taca hopes to expand its cargo operations to South America, using a daily Miami-Panama City-Quito-Guayaquil-Miami route. It will also expand service with Peru, following the recent inauguration of its Lima-based subsidiary, Taca-Peru.
Villarreal said the airline has also decided to open customer resolution centers (CRCs) in 19 countries. The CRCs, to be administered from San Salvador, will be dedicated strictly to cargo operations. Taca already has similar CRCs for passenger operations.