TAP Portugal re-learns the regional game

 - June 1, 2007, 12:37 PM

To ensure their continued survival in the face of reduced income per passenger, regional operators sometimes seek solace in the arms of major carriers, which then might have to re-learn the realities of the regional game. For Portuguese flag carrier TAP Portugal, consideration of short-haul equipment and service costs has become a new experience as the major prepares to complete its acquisition of regional operator Portugalia Airlines.

TAP president and CEO Fernando Pinto recalled the history of European regional airlines as one of high-yield origin-and-destination services, performed with mixed turboprop and jet fleets under independent commercial structures and reservations systems. Today, increased competition has diluted airline yields and prompted leading regional operators to seek niche opportunities and partnerships with larger operators, providing them with access to larger financial bases and distribution systems and to higher-capacity equipment, such as 100-seat aircraft.

In such circumstances, regional operators have had to learn to coordinate schedules and provide capacity to their major partners, considerations that can constrain aircraft use and therefore affect costs, said Pinto. Hopefully, the advantages of commonality and shared access to capital, spares, maintenance, training services and ground equipment mitigate those factors.

Pinto said that Portugalia’s network has proved “a perfect complement” to TAP, with duplication of only six city pairs.

The resulting route and fleet synergies at TAP’s hubs at Lisbon and Oporto would yield a total value of U38 million (about $50 million), Pinto concluded.