Will government-owned Tame Airlines remain airborne? A former government economist says the answer depends as much on politics as on the bottom line.
Tame announced last week that it was cutting an additional 69 jobs from its staff of 1,413, a number that stood at 1,804 in mid-2015.
The airline, which has never been profitable, expects to report another loss in 2016. According to government figures, Tame lost more than $50 million in both 2014 and 2015.
In addition to bleeding red ink, the airline has also suffered a string of public relations setbacks. One of its jets skidded off the runway in Cuenca in April while a small commuter plane ended up in a mud puddle last week off an Amazon region landing strip. News media also reports that Tame has 300% more flight cancellations and delays on routes to Quito, Guayaquil, and Cuenca, than Ecuador’s other major air carrier, Latam.
According to Carlos Guzmán, a former government financial analyst, Correa would prefer to close the airline entirely but is concerned about political repercussions in an election year as well as the fact that Tame serves destinations that no commercial carrier could afford, particularly in the Amazon.
“The president has threatened on several occasions to shut down the airline if the deficit wasn’t reduced,” says Guzmán, “but this definitely won’t happen before the election. Correa is also worried that Tame is getting a bad reputation in terms of service and safety, which makes reducing the deficit even harder.”
As an example of the political game being played to protect Tame, Guzmán cited last week’s report by the comptroller’s office criticizing the Cuenca airport authority for taking short-cuts in runway repairs conducted last year. “It’s a highly technical report that claims that that CORPAC (the airport corporation) opted to save time and money in the resurfacing,” he says. “The problem is that CORPAC acknowledged that the fix was only good for two years and said it had to consider local businesses and travelers who were being hurt by the airport closure.”
Guzmán added that Latam, the other airline using the Cuenca airport, never complained about runway problems. “It was clear that there was a competency issues involved in the Cuenca accident.”
According to Guzmán, there is no real solution for replacing the unprofitable routes that Tame currently flies. “In Cuenca, Avianca is ready to step in and replace flights if Tame ends service,” he says. “There’s no such option for flights to smaller airports.”