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Company of the Year: Arajet
Latinvex names Dominican startup airline company of the year.
BY LATINVEX STAFF
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.
© Copyright Latinvex
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