SANTIAGO Feb 3 Bill Franke, one of the world's
most-influential investors in budget airlines, debuted a low
cost carrier in Chile on Friday that aims to expand regionally
in the coming years.
Franke, co-founder and managing partner of airline-focused
investment fund Indigo Partners, said new carrier JetSmart plans
to operate three Airbus A320s this year in Chile and
add another six in 2018. Once established in Chile, JetSmart
will eye regional expansion, he said.
"We haven't gotten to that yet, but we have a lot of
interest expressed by other countries," Franke told Reuters
after the debut in Santiago.
"We need to get the base of operations here, stabilize the
airline...and then we will expand the airline."
Franke's Indigo Partners, which already controls
Denver-based Frontier Airlines and owns part of Mexico's
Volaris, is known for unbundled or a la carte fares in so-called
ultra-low-cost airlines, where passengers are offered cheap base
prices with the option of paying more for extras.
Indigo Partners is also in talks to acquire part of Canada's
Enerjet, and Franke told Reuters the fund was currently talking
with regulators to better understand foreign ownership rules.
Canada's transport minister announced in November that the
nation would lift foreign ownership caps in airlines to 49
percent from 25 percent in a bid to aid start-ups seeking
"There's no final decision," Franke said.
"We've hired advisers, and we're in the process of talking
to the government about ways we might be able to invest in a
Canadian airline, but it's really an issue between the
Regarding Europe, Franke said the airline scene is ripe
there for consolidation, echoing various other industry leaders
who have made similar comments in recent months.
"I think over time that will happen in Europe, and we will
be a motivator to consolidation," he said.
Franke said Chile's large middle class, relaxed foreign
ownership rules, and clear regulations made the country
attractive for Indigo Partners' entrance into Latin America.
In neighboring Argentina, which Franke called a "nice
market," the budget airline industry is also heating up, as
low-cost Norwegian Air Shuttle ASA and start-up
Flybondi have announced plans to enter the market.
That nation's transport minister told industry executives in
December that the government expects $1.7 billion in budget
airline investment over the next four years.
"We know Argentina well....It's a nice market, we like the
market, but it's more complicated than Chile," Franke said.
"So we want to have a nice, stable platform, which we think
(Writing by Gram Slattery; Editing by Anthony Esposito and