Aserca, a Venezuelan airline, sets its sights on international routes just as competition heats up at home.
SIMEON GARCIA'S DREAMS WERE hardly ambitious in 1991. With two Cessna airplanes inherited from an earlier venture, Garcia, then 29, a college dropout and unemployed, got the idea of flying business executives back and forth from Caracas and Valencia, the country's second-largest city. To that end, he bought Aeroservicios Carabobo, an air taxi charter known simply as Aserca, for $1,000, only to discover that the fine print on his contract required him to either fly several domestic routes or lose the charter.
Garcia leased Aserca's first two jets using his savings and backing from his well-to-do family, who were former land-holders in the eastern state of Bolivar. That same year, the Venezuelan airline Aeropostal collapsed, opening the door for a new competitor. Enter Garcia's privately held Aserca. All of a sudden, the former air taxi operator was about to become a full-fledged airliner. "I never planned on going into aviation. It was accidental," says Garcia.
Garcia may have stumbled into the airline business, but Aserca's strategy of targeting the business traveler is no accident. The airline offers wide seats, complimentary cocktails, and on-time departures at economy class rates. With businessmen representing more than 90% of the airline's customers, revenues have grown from US$14.8 million in 1994 to $87 million last year. But Garcia still isn't satisfied. He is expanding internationally.
In the last 12 months, Aserca has purchased a small airline in Aruba, signed a marketing alliance with Continental Airlines and is adding Brazil and Argentina to its existing international routes.
Profit margins, however, have taken a hit, dipping from 13% in 1997 to only 3% in 1998. Competition within Venezuela is growing. Remember Aeropostal? Far from being down and out, it emerged from bankruptcy in 1996 under private management and is giving Aserca a run for its money.
It seems there might he turbulence ahead for Aserca. But, says Robert Booth, president of Aviation Management Services, a Miami-based consultant, "They are more than a flash in the pan."
All-business air. What airline novice Garcia simply calls "common sense" has certainly yielded some pretty wily moves in the past. The young executive, for example, acquired failed Eastern Airlines' planes and refurbished them with an all-business-class seat arrangement instead of the standard...