Why Viva Air Wants to Put Latin America’s Startups on the Map

With 18 short-haul aircraft based in Peru and Colombia, discounter Viva Air is far from Latin America’s biggest airline group. But the company, which recently changed CEOs and just took delivery of the first two of what will be 50 new Airbus A320s that will allow it to grow, seeks to disrupt established competitors in another way —  by focusing on digital strategy.

Viva Air recently announced a new lab dedicated to advancing technology through partnerships with universities, government entities and local tech companies. The new CEO Felix Antelo, who had led LATAM Airlines Perú, said in an interview that the airline strives to achieve three main objectives through what it calls Viva Air Labs: reduce costs, improve customer experience and optimize processes.

More broadly, the airline also seeks to establish a culture of collaboration in a region not known for its startups, and make a name for itself as the region’s most innovative airline. “It’s a message that we want to give to the industry and the community — that technology is important for airlines and it definitely matters,” Antelo said.

Viva is not the first aviation company to create a tech-focused spinoff. For example, JetBlue opened its Silicon Valley arm, JetBlue Technology Ventures, in 2016 and Airbus developed A3 lab to focus on its most forward-thinking projects. But fewer aviation companies in Latin America have pursued the strategy. In announcing its program, it said it was “the first and only innovation laboratory in the aviation and tourism sector in Latin America.”

Viva Air’s lab has already worked with several universities in Colombia and Peru, as well as government departments focused on tourism. Beyond that, it has opened a call for submissions for ideas to improve the travel experience.

First Projects

Low-cost developer Irelandia Aviation, which is led by Declan Ryan, a co-founder of Ryanair, launched VivaColombia in 2012, and last year started operating the Viva Air Peru subsidiary. Together, the airlines fly between Peru and Colombia, as well as domestic routes in both countries. It also flies to Miami via Medellín, Colombia.

The market is ripe for a discount airline, Viva Air’s leaders say, because air links in South America are less developed than elsewhere.

Antelo noted that Peru, along with Chile, has the fastest-growing domestic market in the region. And while competition in the country remains fierce, Viva aims to have the second-largest market share in Peru by June 2019, he said.

“One of the good things is that, in Latin America, it’s such an untapped market,” said Clyde Hutchinson, head of innovation at Viva Air Labs. “Connectivity between countries is only just starting.”

But the company wants to ensure its potential customers can buy tickets, so one of the lab’s first projects is developing a method for customers to buy airline tickets through the chat app WhatsApp, which recently launched an application program interface, or API, for businesses.

The app is wildly popular among Colombians for personal and professional reasons. A recent Global Web Index survey indicates 89 percent of Colombians polled reported using WhatsApp in the previous month, and also showed smartphones are their most-used devices. Furthermore, as many as 83 percent of Colombians use WhatsApp to communicate with businesses, according to Viva Air Labs’ research.

Still, Viva plans to continue taking cash as payment. Like other airlines, Viva allows fliers in Colombia to finalize ticket purchases at the supermarket. It’s also important that Viva continues to take cash as it tries to increase its presence in Peru, where as many as 25 percent of its transactions are done in cash, Antelo said. In Colombia, that number is somewhere below 20 percent.

“In Peru, cash is even more important than here in Colombia,” Antelo said. Cash is “definitely a feature that we have and that we still need to push.”

Antelo said another focus for the lab is creating a “much more personalized experience” for fliers throughout their trips, using information about their travel habits. As an example, a Bogotá-based traveler who frequents the beach might receive special offers about flights to San Andres island, rather than to Medellin.

Viva is also working with the Colombian government to develop a tool to improve the content for different tourist destinations. The first is Santa Marta, Hutchinson said, a beachside destination popular with Colombians but not as well-known to foreigners as Cartagena.

‘How do we make the content we have more relevant for the people who travel for us?” Hutchinson said. “How do we make that less static and more innovative?”

Bigger Transformation

Improving customer service is one area that the airline is striving to improve as it unifies its Peru and Colombian operations and touts its fleet-renewal efforts

It recently packaged these efforts through a five-year plan called #vivasetransforma (Viva is Transformed), which also focuses on providing on-time flights, low prices and responses to customer inquiries in less than a day.

Antelo admits VivaAir can be more focused on customer service, and technology can help play a role in doing so. The airline is also planning to introduce  a new website that will include improvements to the check-in process. Technology can also help with increasing online purchase rates and ancillary revenues, which currently represent about 20 precent of the airline’s revenue.

Some of its other customer service improvements are more low-tech: in June the airline increased the size of the free personal article flyers can bring on board from 6kg to 10kg, and it is trying to be more flexible with some of its baggage policies at the airport.

This story has been updated with more current information about the airline’s fleet.