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Uncertainty about air travel grows as Latam is second Ecuador carrier to file for bankruptcy

Scenes like this at a Latam check-in counter are unlikely to be seen again any time soon.

Despite Ecuador’s decision to resume domestic and international air travel on June 1, there is growing concern about what that service will look like. On Monday, Latam, Ecuador’s largest commercial carrier filed for bankruptcy, less than two weeks after Avianca, the country’s other commercial airline, did the same.

Government officials are counting on the two airlines to fill the service void left by the closure of publicly-owned Tame airlines.

Although Latam and Avianca say they will continue to fly and intend to serve the Ecuador market, bankruptcy allows them extra leeway in determining schedules and which cities they fly to. It seems certain that some airports served by Tame will have no service at all.

“Under the U.S. chapter 11 bankruptcy filing, the airlines will have a laser-focus on serving the routes that are profitable,” says Mexico-city airline consultant Robert Mitchell. “The government has been talking to them about serving small airports served by Tame and we can be fairly certain now that this will not happen.”

There was additional uncertainty Monday about the rules that international travelers entering Ecuador will be required to follow. Airlines are telling the Ministry of the Interior that a requirement that incoming passengers provide proof of a Covid-19 test before flying is not feasible because of the difficulty, in some countries, of obtaining the test. Interior Minister Maria Paula Romo said she will review the rule.

In announcing the bankruptcy Monday night, Latam said that reservations, employee pay, flight vouchers as well as passenger and cargo operations will not be affected. Last week, the airline announced its second round of downsizing, furloughing 1,400 employees. Latam is South America’s largest airline.

“The U.S. Chapter 11 financial reorganization process provides a clear opportunity to work with our creditors and other stakeholders to reduce our debt, address commercial challenges that we, like others in our industry, are facing as a group,” Latam CEO Roberto Alvo said. “It is very different from the concept of bankruptcy in other countries and is not a liquidation proceeding.”

Alvo cited coronavirus-related travel restrictions as a main driver for the decision to file for bankruptcy. “We are looking ahead to a post-Covid future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount,” he said.

The reorganization will affect Latam affiliates in Chile, Brazil, Argentina Peru and Colombia as well as in Ecuador and the United States.

54 thoughts on “Uncertainty about air travel grows as Latam is second Ecuador carrier to file for bankruptcy

  1. The combination of airports opening at 30% starting June 1st, the liquidation of TAME, and the bankruptcies of AVIANCA and LATAM causes concerns, especially for travelers with expiring or expired visas.
    The law establishes that once the emergency ends, foreigners will have 30 days to regularize themselves, without paying a fine.
    How will I know that the emergency is over?
    When will the 30 days to regularize begin?

    1. “…foreigners will have 30 days to “regularize themselves”, without paying a fine.”
      What does “regularize themselves” mean, please?

    2. Thanks Davis. What’s the current meaning of “regularize” in this context? Thanks again.

      1. get into compliance with the regulations….
        either leave the country or get a valid visa issued or renewed

    3. LATAM has filed bankruptcy in an American court I don’t know about AVIANCA. I wouldn’t be surprised if LATAM will be the only airline for national flights out of UIO for a long while.

    4. If you overstay your visa you will be banned from returning to Ecuador on a T3 for 9 months (sometimes 12 months, depending on the immigration officer). There is no fine and you can still return if you get a visa. Those are immigration’s rules.

  2. Perhaps the liquidation of TAME is premature. If LATAM and Avianca reduce service significantly, TAME might be the only option in smaller cities like Cuenca.

  3. I wonder, in a small country like Ecuador, how important is air travel to small cities to tourism specifically and economic trade in general?

    We always take the 3.5 to 4 hour van ride between Cuenca and Guayaquil because of the amount of luggage we normally check. So, we have never flown into Cuenca and I suspect we wouldn’t regardless of available flights.

    We also have never flown into or out of Quito because of the 12 hour bus ride instead of the shorter trip from Guayaquil. The question I am trying to ask is how many tourist won’t visit Cuenca if they can’t fly and have to take a bus or van instead from Quito or Guayaquil?

    I guess one question concerning the impact of not having commercial air service in Cuenca might be, the percentage of tourist entering through Guayaquil vs Quito. Perhaps someone in the travel industry would know. It might be an interesting question to ask in terms of understanding the impact of these airlines not offering service to the “smaller cities”. Of course, Cuenca, as the third largest city in the country, might still have air service.

    By the way, for those who know i am still “stuck in Dallas”, I have a return flight scheduled for June 21. See you all soon.

    Thanks,

    Steve

    1. Latam used to fly from Quito to Cuenca. Perhaps they still will. I *love* the buseta ride to and from Guayaquil through the Cajas. I think it’s a perk of flying into Guayaquil.

    2. I always fly from Vancouver BC to Quito to Cuenca, and I used to be able to get flights for less than $900 total Canadian. Which is Approximately $645 US. I have a great place to stay minutes from the airport in Quito, which allows me to rest up before continuing on to Cuenca. They also have day rates for those of you who don’t need to stay overnight there.

    3. Steve, when you say you have a flight scheduled can you please elaborate. We were due to relocate to Cuenca April 6th and were caught out by the closures. We are wanting to make a one way trip to Quito our situation is complicated by having two LARGE dogs. Thanks for any guidance.

      1. Where are you coming from Tim? We made the move from the US to Cuenca 2 1/2 years ago. Three people, four cats, two large dogs, and enough baggage to fill up the remaining space of a Hyundai H-1 van. The man who managed our container shipment was able to book the van for $300. It was far, far less expensive than air travel even though I had to make the trip twice in three days due to difficulties getting the dogs confirmed to Quito. The animals were the toughest part, most time consuming and most expensive, of the move.

        1. WE are coming from Atlanta, but the pet relocation company we are working with ONLY works out of Houston, So we had a big itinerary planned to drive, spend a night in New Orleans, fly out of Houston to Quito, drive to Cuenca with a driver. All torn to shreds. 🙂

          1. Sorry I didn’t get back to you yesterday. It was a crazy day, almost normal. I don’t envy you that trip. It brings back too many memories although everything turned out really well.

            We lived near Nashville for 30 years. My shipper, Casandra, was in Colorado Springs, CO. She is incredible. When everything came together with 36 hours until our flight the plan was ground transport to ATL to stay in a kennel of a former partner and shipper in ATL. The dogs stayed with him two nights, flew to Houston on UAL to stay one night in UAL’s kennel facility, then to Quito the next evening. It worked like a charm with all sorts of craziness along the way. I spent 4 hours in the cargo facility in Quito, UIO, starting at 11 at night getting them out of customs in a pouring rain. Fortunately, like all of the people Casandra used to ship our dogs, the agent in UIO was fantastic. Even with my fledgling Spanish we got everything done.

            Another star in the story was the Airport Wyndham at UIO. Wyndham worldwide cater to customers with pets, remember that. Incredibly helpful staff, decent price. I don’t know if they’re open again but I cannot recommend them any higher. Spending the night there before the ride to Cuenca is a great idea if your plans are fluid. I only got dinner and about four hours sleep but it was well worth it. I suspect that like ours your plans are much runnier than you’d like. Hang loose, keep your cool, and all will happen in it’s own time. That’s great training for living here.

            You probably know that temperature may be your biggest challenge. The 85F temperature limit is a hard limit. The airline will not accept the animals if it is forecast or actually warmer than that at departure . Even in early January when we shipped it was a concern. Now, almost June? I wish you luck.

            Edit: I just saw the story that national and international air travel is opening in Ecuador on Monday, June 1. Good luck.

      2. I can tell you that bringing the dogs in through Quito can throw a wrench into your plans. Quito customs can and often hold up things for whatever reason. You may fly into Quito with your dogs, planning to take the next flight out, only customs holds up your dogs. Wrench. And due to the size of the crates required for dogs, you probably won’t be able to fly them from Quito to Cuenca and (will like us) have to hire a van for the 12 hour drive. Another problem you face is that, the window for flying pets in the US is rapidly closing since airlines accepting pets is determined by the air temps at the airports. And don’t get me started on what it’s like if anyone in the process thinks your dog is Pit Bullish in the slightest amount. I feel for you.

    4. Hi Steve
      I also am interested in guidance on getting a flight to Ecuador. I had flights from JFK to Guayaquil booked on JetBlue for April 30 and June 1. Both were cancelled by the airline. I’m hesitant to book again because of the 72 hour negative covid-19 test requirement that was mentioned in a coupe of articles here. Are you factoring that test into your plans? Test results in Massachusetts range from 4 hours to a week. I’m hoping they relax that test requirement. Any insight would be welcomed by me. Thanks

      1. I had not factored in a human test, but since we are bringing dogs we have a ten day clock start ticking once we have THEM inspected by a USDA approved vet. Any folks out there interested in pooling resources and hiring a charter once the borders open up. 🙂

    1. Why would I want to go anywhere? All my stuff is at home. I am looking forward to being able to travel by car, though.

  4. There is any regulation for Ecuadorians who need to go back to the USA with a turist visa?

  5. Not to worry! We have a big red tram that goes no where and takes millions to keep running. Priorities?

    1. Goes nowhere? Approximately 20 km of rail laid, debt incurred and due irrespective of Covid 19. Why not use it.

        1. And at a projected deficit. It seems odd that a city would create a tram that was projected from day one to be a financial burden when bus service serves the city nicely.

          1. Fixed infrastructure systems unify a city and ensure its viability. The fall of Detroit was when it sold its streetcars to Mexico City and removed the tracks, then started using GM busses. That system was sold to them as a futuristic and flexible way to move people and meet the needs as they arose. What that did was to aid in the exodus out of the city Center and everyone that could move to the suburbs did just that. There was no longer an advantage to living in the city. Prior to the removal, the properties close to the streetcars were the more desirable ones. I picked my condo here because it’s beside the tram, I bought my rental properties in Toronto all near the subway, they will rent for more and easier. This is a lesson taught in the U of T “how to dismantle a city” continuous improvement in infrastructure unites a city and helps increase and maintain property values.

      1. Tell me all the pro’s of having a financially burdensome tranvia. Have you been staying abreast of the cost to the people to have this thing running? It isn’t a few hundred bucks, it is millions of dollars each year down the drain.

        1. Read my post about fixed infrastructure. Yes it’s initially a financial burden but not having fixed infrastructure can be much more expensive.

          1. Wow, tell me the bottom line. Cuenca dumped more that a quarter billion dollars into a project that will continue to cost millions to operate and maintain. Who will benefit?
            Who benefits now? How many businesses were closed because of the years of construction? It is a loser. No way to dress the pig up and make it profitable, close it down and stop the wastefulness.

            1. Yep that’s too expensive… now it’s here, should we tear it out or pay the maintenance?
              $250 million, for that, that’s not too bad… they paid that per kilometer for the subway in Toronto…

              1. If it were able to break even, or come even close then keep it. Otherwise tear it out. It is not a useful public project that cost millions of dollars of public taxpayers money. It could be used elsewhere.
                Another idea, set a price for private ownership and operation. Not supported by taxpayer money. There you go people, jump on it since it is such a great deal.

  6. Moreno’s decision to liquidate TAME given the financial realities of the other major players in Ecuador is simply another example of the total ineptness of Moreno’s policies.

    He needs to step down and allow someone with competence to begin running the country.

    But wait, don’t I see Correa waiting in the wings to fly in and save Ecuador???

  7. The major reason that you see all the airlines, especially in the US, filing for bankruptcy is that like
    most working people the airlines live paycheck to paycheck. They airlines function that way because the profits all go to the shareholders and nothing is held in reserve for financial emergencies like what is happening now. Then they can always file for bankruptcy protection, like so many airlines have done several times in the past, screwing their suppliers and cutting employees while the fat cat shareholders feel no pain and keep getting fatter.

    It’s not likely to happen but, the establishment of businesses as corporate entities should be illegal
    and all existing corporations should be dismantled. A corporation is an artificial entity with more rights and power than a natural human being and an inordinate ability to influence the actions of
    politicians to act in favor of a given corporation through lobbying (aka bribery).

    1. Corporation do have too much authority, but the whole system doesn’t have to be destroyed to reach the proper results. Just put people in government that create the proper laws that limit the power of those vast, manipulative, power hungry corporations. It was the Supreme Court that gave the US corporations the ability to be a huge political tool. It’s the job of Congress to enact laws to curtail that power. Those are the ones that you need to lobby for that. Good luck…

      1. Do you seriously believe that there are any people left with a shred of honesty who could not be bought or intimidated by these corrupt entities? Just look, with open eyes and a lack of naivety, at the US Congress now; it is the biggest cesspool on the planet and for sale to the highest bidder. And, as far as limiting the power of corporations, the US Congress has been passing legislation to protect their benefactors for a long long time. Are you aware that Bitch McConnell is forcing through congress, as part of the latest relief package, a provision to shield corporations from law suits relating to illness from the Corona Virus??

        Also, since Trump has been megalomaniac in charge he has installed about 193 Right and Ultra-Right judges to the courts. If the Supreme Court were any more Right leaning it would tip over. Cash and carry justice, cash and carry freedom and cash and carry Democracy is what you now have for a government in the US.

        And, just to be clear, I have no political affiliations Republican or Democrat. I stopped participating in that dog and pony show long ago because they are just different sides of the same coin. Voters need to grow up and stop devoting all their time watching those overpaid primadonnas in Baseball, Football, Basketball etc or the latest Hollywood bimbo scandal or the newest pimped-up HBO series and learn what is really going on with business and government. I guarantee you that will never happen!!

        1. It’s funny how much I agree with all that. We have the ability to vote with our check books every time we are at the mall. Every couple of years we have the ability to actually vote for our representatives… the problem is we really have been divided by the red and blue and haven’t forced the actions required to change these problems… another party is something I’d personally love to see, maybe call it the moderate party… while we are divided the two groups in power are systematically removing the middle class, while we fight between ourselves for the scraps…

          1. At this point in the US a third party would be disastrous. Whenever a person runs as an Independent it just siphons votes away from the other candidates and changes nothing or makes a bad situation worse. What America could be and what it actually is are two very different things.

            The Republican party represents a plutocracy with a generous sprinkling of racism. The corporations they represent and cherish are nothing more than 21st Century plantations where politicians are the overseers whose job it is to keep the workers distracted, in economic fear and always producing a profit for the owners.

            The Democratic party could be a champion for the hoi polloi but has its share of Jekyll & Hyde politicians hungry for money and power too. And the ones who are not duplicitous insist on fighting the Republicans according to Marquess of Queensberry rules when they are in a street fight with no rules. They are experts a screwing up a one car funeral.

            And, finally we have the voters. To quote P.T. Barnum “There’s a sucker born every minute.” Give these clods bread and circuses and any politician or corporation has carte blanche.

            1. Yes agreed, the third party would draw votes from the other parties… that is the point… if we do nothing, then nothing changes and the disaster cycle continues… if change isn’t your goal than what are you complaining about?

        2. About the provision to shield corporations from coronavirus lawsuits. If an employee sues an employer, saying he caught the disease at work, how can we know that is where he caught it? With that possibility hanging over the employer’s head, he is much less likely to reopen. And of course, every employee would swear he caught the disease on the job, following the deep-pockets caper. If you don’t see the need for protective legislation like that, I can’t help you.

          1. Most get there health insurance through their employer, if you don’t go to work you don’t have coverage. That forces workers to go to work and leaves them vulnerable to any pathogen in the workplace. If employees don’t feel safe and they can only protect their families by going to work while getting no protection or the ability to sue if the company is negligent and doesn’t provide the proper PPE. Who is the government working for? Regardless of how the companies feel they should be held accountable for deaths due to negligence. I understand that most companies will do their best to protect the employees but there are others that will take full advantage of this loophole and put their employees in danger without any thought at all..

          2. I don’t need help from people like you. And, like most right leaning corporate employers, they will take the loans the Repulsivcans are pushing to gluttonous corporations and screw the employees, and mom and pop businesses, as they always have done.

            Also, your comment about my lack of knowledge “NONE” is more indicative of your predilection to run your mouth before you have any substantive facts about a person.

    2. Delta Airlines pays a 6.26% dividend. American pays 3,59%. The others don’t pay a dividend. So when you say all the profits go to the shareholders, you certainly show your knowledge of the subject – NONE. I don’t buy stock as a charity; I expect a dividend. Do you have a problem with that?

      1. CEO’s are not shareholder who get big fat unearned bonuses besides the dividend?? Who is a little short on knowledge of the subject??? OINK OINK!

  8. The planes that have been grounded will be more than ready to fly by someone once the demand re appears. Trust me

    1. There are tremendous profits to be made, however, I would be afraid to get on board since the planes and pilots have been sitting and not staying current. It will be interesting to see what the determination of the Pakistan crash (I think it was Pakistan) turn out to be.
      I will stay home and refrain from flying until some time passes.

  9. Many country’s will not be allowing Americans to enter by air because of there inability to combat COVID-19. At one time it was an honor to travel with a US passport but now it is a liability.

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