Ecuador News

Tame troubles: Airline’s future is uncertain as it announces a new round of job cuts

Will government-owned Tame Airlines remain airborne? A former government economist says the answer depends as much on politics as on the bottom line.

At Tame jet at the Cuenca airport.

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.”

  • JoJo

    The main problem with the lack of profitability of Tame is their fare structure. I have flown from Loja to Quito for $6o bucks. The reason
    the fares are kept low is to allow Ecuadorian citizens to be able to fly.
    The Tame airplanes are not real clean, but my flights have taken off & arrived safely. the flight from Loja to Quito is one of the most scenic
    flights in Latinamerica. Taking off & flying through the valleys to climb to altitude is beautiful.
    One possible solution…raise the fares a little(say 15%) and reduce the number of flights, and fly those in rain or shine. Yes, there would
    a loss of employees and some aircraft to sell…but it would keep the “airline” running for the citizens of Ecuador & gringos too.
    The rainy-landing in Cuenca was pure pilot-error, as I have posted before. I have landed loaded commercial aircraft in the U.S. and other countries in much worse conditions. I am a retired American commercial pilot, 35 years of flying passengers, safely, to their destinations.

    • sueb4bs

      This experience that you have is providing smart options for the govt as it considers what to do with TAME — I agree with many of your sound early paragraph ideas. These issue for the govt and TAME are not new… thanks.

  • Tommy H.

    If TAME shuts its Cuenca operations, then only LAN would operate there. There are 48 flights in and out of Cuenca per week- 31 with TAME, and 17 with LAN, according to “El Tiempo.” TAME flies to Guayaquil, while LAN does not. You will have to take the vans/buses/private cars to Guayaquil if TAME stops flying.
    Plus, Cuenca Airport will probably cut back hours, maybe even be closed 1 day per week if TAME ends service. Airlines pay rent to the cities they land in, and Cuenca will lose about 2/3 of the rent they get to operate the airport, so expect the airport to be shut on certain days.
    Try to schedule your flights to Quito as much as you can.

    • Dan

      You misunderstand how the airline business works, Tom. If Tame folds, Latam will increase the number of flights and another carrier, probably Avianca, will set up shop. We will have more, not less options. Cuenca is growing rapidly and as the economy improves so will air service.

      As for the Guayaquil route it doesn’t make sense anyway. The new micro-buses make the trip in about 2 1/2 hrs for $12. Why pay $100 to fly?

      • Johan Klok

        You are right that LATAM will add flights and that Avianca may return. But air service is not growing in Cuenca. There are less and less passengers flying from and to Cuenca.

    • Aging Expat

      Although not a major thing, it still annoys me that twice I’ve had paid flights that were cancelled, and when I go to reschedule, TAME says they can’t find my records. Yeah, sure.

      The problem here is that “desperate people do desparate things,” and so do desperate airlines. The government should just close the damn thing and let private enterprise take over, otherwise you’re just rewarding incompetence, nepotism, and plain bad behavior, an all too frequent mainstay of government intervention to begin with.