"Without the United States, Arajet was not viable": an interview with CEO Victor Pacheco
Arajet’s CEO spoke about everything: the comparison with Copa Airlines, the possibility of incorporating the Airbus A321XLR into the fleet, why the Punta Cana hub kept growing, and how crucial it was to obtain DOT approval to serve the Dominican diaspora in the U.S.
In the announcement of Arajet’s new route between Punta Cana and Córdoba, the company’s CEO, Victor Pacheco, kindly took a few minutes to speak with Aviacionline to discuss some of the topics surrounding the airline’s present and future operations.
Aviacionline: The confirmation that you are evaluating Airbus aircraft was surprising, considering you are a case of Boeing leadership in the region.
Victor Pacheco: Yes, but these alliances are achieved with manufacturers when a direct purchase is made, and we could make another purchase that allows us to establish a strategic alliance with a different manufacturer. There are cases in the world that have these agreements, even dual agreements. But the reason we are talking to both manufacturers is that we are a very special airline.
Normally, an LCC has short-haul flights, but we operate very long flights and those routes, with the 737-8, have a penalty: we are limited to flying from Argentina with a maximum of 154 passengers on an aircraft with 189 seats. So that’s why we have to knock on both manufacturers' doors to see what products they offer.
A: Still, you wouldn't go for a widebody aircraft.
VP: No, today’s options would be to acquire more 737-8s, 737-9s or Airbus A321XLRs. The 737-7 has two drawbacks, even though it has longer range: it is not yet certified and ends up with a maximum capacity close to what we fly with the penalized 737-8.
A: In the May filing to the JAC, you requested Córdoba, Mendoza, and Rosario, but you also wanted to fly to Asunción and more cities in Brazil, Paraguay, Uruguay, and Colombia. Are those still in progress?
VP: Yes, and there will likely be updates on international routes in July. The change in Argentina’s regulatory framework makes route authorization much faster.
A: Does the bureaucracy of the Dominican Republic’s aviation authority limit you?
VP: Not necessarily, it doesn't limit me. There are procedures to follow, but we plan well and achieve what we want within the timeframes we set. I don’t feel limited, we’ve become used to complying with processes in the time they require. In the case of Argentina, the changes make the processes much shorter.
“Our onboard product is superior”
A: The comparison is constant and almost inevitable: when the projects to fly to Mendoza and Rosario progress, you will compete directly with COPA. What is your differentiator?
VP: We are a company with a long-term approach to creating our own hub and network in the Caribbean, where there is a significant benefit in terms of flight time and where you connect. In that sense, the geographic position of the Dominican Republic is the most important differentiator. The rest is in the product: we believe that our onboard customer service is superior to what our competitor offers.
A: There is a difference between the hubs in the Dominican Republic and Panama: in Santo Domingo and Punta Cana, passengers are split between those connecting and those staying for tourism. How does having two passenger segments with such different behavior impact your strategy?
VP: The Dominican Republic has that particularity, so creating a Dominican airline that understands that makes perfect sense. We have a point-to-point market that Panama doesn’t have, and we are leveraging that while taking advantage of the geographic position to offer broader connectivity.
“We found infrastructure challenges in Santo Domingo”
A: When the Arajet project began, the idea was to create the Hub of the Americas in Santo Domingo, but the Punta Cana hub gradually grew. Was it the market speaking or was something else at play?
VP: No, we found infrastructure challenges in Santo Domingo. A new terminal was being discussed for 2026 and now it's being talked about for 2029, and with the number of aircraft we purchased, it's impossible to accommodate that growth in a single airport, and so the strategy changed. A change that made a lot of sense when we did an analysis with a consultancy in which we had two hubs: one in Punta Cana oriented toward tourism and connections, and another in Santo Domingo for VFR traffic and connections. From a network standpoint, it helped create differentiated offers for different passengers.
A: Virgin Australia, also a Bain Capital investment, went public and was well received. Is an IPO the next step for Arajet?
VP: I was pleasantly surprised that it went up 11% in hours, the investors are very happy. That is Arajet’s path, and we are aiming for a public offering by 2030.
A: When the DOT permit to fly to the United States wasn’t arriving, how close were you to walking away from the project?
VP: I was never close to saying “enough,” but I can tell you it was extremely frustrating and that I felt bad for my investors because I had sold them a plan I couldn’t deliver. I was personally very frustrated, I can’t explain how uncomfortable it was because the negotiation was beyond the airline’s control and was bilateral between governments.
That’s why I appreciate the effort both countries made because we did communicate to them that if we couldn’t access the U.S. market, we had no long-term viability, there was no critical mass to have a viable project. An airline that can’t operate with an average utilization above 11 hours and a fleet of 20 aircraft can’t be profitable. It doesn’t matter who finances it, it doesn’t matter who manages it, it becomes a business that won’t be successful.
Desde 2017, haciendo periodismo aeronáutico. Award-Winning Journalist: Ganador de la edición 2023 de "Periodismo de Altura", otorgado por ALTA. Facts don't care about your feelings.
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