Airlines dog fight over flights to Chiriqui

THE COPA Airlines plan to start twice daily flights from Tocumen to the Enrique Malek Tocumen International Airport in the city of David on January 8,  flouts a 2003 law stating that 60% of the shares of the companies providing the service of air transportation in Panama must be owned by nationals, say the directors of Air Panama.

 The local airline that has been providing the only flights to Chiriqui, on a route that covers 51% of Panama’s internal flights is facing a battle with a company that earned over $300 million in the third quarter of this year.
Eduardo Stagg, CEO of Air Panama, says he will ask the courts to enforce compliance with the law, reports La Prensa.
In affidavit delivered October 28,2014 to the Civil Aviation Authority (CAA), PedroHeilbron, CEO of Copa Airlines, stated that 99.7% of the shares of the company are owned by Copa Holdings, and represents at least 60% of the votes issued to Panamanian nationals.
Heilbron said that the entire board of Copa Airlines Panamanian consists of individuals,and that 8 of the 11 members of the board of Copa Holdings are Panamanians.
Stagg says that the information provided does not reflect the reality of the company. Documents given in 2013 to the UNITED States SEC as part of the rules for trading on the NYSE.
At that time the company declared that less than 50% of the shares were held by nationals.
According to Stagg, Copa could pretend to rely on the decree 542 of 2005 issued by the president Martin Torrijos, which regulates Article 79 of Law 21.
This regulation states that to operate in Panama, 51% and not 60% of the shares must be owned by nationals. But “a decree cannot supplant a law,” Stagg said

A Copa spokesman told La Prensa that the company delivered all documents required by national regulations and ensures that they meet all the requirements of the law
However, according to Stagg, several rules are in breach of their entry into the domestic market.
Fuel clause, whose incorporation is mandatory in arate that is offered to customers. Copa , meanwhile, has not included it in their rates as published on the website
The airline asked the AAC that approve a package of four rates ranging from $150 to $400 for a round trip ticket to David, Chiriqui.
In its request, Copa said the new offering will alleviate complaints that passengers have only one option to fly to Chiriqui, and that the proposed PRICES are within the range used by Air Panama.
It adds that they do not represent ruinous competition in the market.
The prices offered by Copa are $100 below the current rate of Air Panama on its flights to David.
Stagg believes that the only purpose behind these fees is to get the Air Panama market. “And once this is achieved, then prices will rise.”
Why would Copa be interested in making this move? According to Stagg it is revenge for the entry of Air Panama to Medellin, Colombia, one of the main markets for Copa.
“They have been characterized as having the highest prices in the region, and now want to be the champions of justice in Panama. Obviously they want to kill the competition, “Stagg said.
According to calculations by Air Panama and based on projections of occupation, with rates offered by Copa, the company will lose about $ 7 million a year, which would be distributed in its 71 destinations out of Panama.
The company expects an occupancy between 40% and 56% during the first year of operation to Chiriquí, using an Embraer 190 aircraft with a capacity of 94 passengers.
Stagg says the ending of competition would lead to disregarding the routes to Bocas del Toro, Guna Yala and Darien by Air Panama and nobody cares because they are not profitable.
 

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