Arajet CEO talks growth and expansion
When you ask Victor Pacheco, CEO of Arajet, how the carrier’s first year of operation has gone, he’ll tell you that “it has been an amazing year.”
Arajet is the first low-fare airline in the Caribbean region, starting its operations in September 2022 from its base at Las Americas Airport in Santo Domingo, operating a fleet of new Boeing 737MAX-8 aircraft to and from the Dominican Republic and connecting to destinations in North, Central and South America, and the Caribbean region.
Currently, Arajet serves 18 destinations in 15 countries, but Pacheco makes it clear that the carrier is getting ready for more growth with plans to double its fleet from its current five aircraft to 10 aircraft and to go from 18 destinations to 22 destinations.
It will add Toronto on Oct. 24 and Montreal on Nov. 7 with four flights a week from each; and it is also adding Sao Paulo, Brazil; Santiago de Chile in Chile; and Buenos Aires, Argentina.
But to get to this point, Pacheco told Travel Courier that it has taken eight or nine years and “it has been an entrepreneurial journey,” but he believes it was a worthwhile journey to make “because the region was stuck with high fares all over the different markets and the only way to access lower fares was to create something like Arajet.”
Learning from the past
So, Pacheco and his team did their homework and discovered that “it wasn’t only a problem of high fares, but [it was a problem of] bad connectivity” in the Americas.
And he said “we immediately saw that through Santo Domingo [in the Dominican Republic], you could have a lot of efficiencies.”
Pacheco also said that Arajet learned from other carriers that started service in the Caribbean, but hadn’t been able to make it work.
“We noticed that the previous airlines [the ones that started and disappeared] never used a disciplined model – we’re not a ULCC, we’re not a low-cost airline, but we do have fundamental similarities.”
He told TC that the hub and spoke model had not been tried before in the Caribbean to connect it to North, South and Central America.
“We’re not just a regional carrier, we’re actually a carrier that spreads all the way through the Americas,” Pacheco said.
So far in its first year, Arajet has flown almost 400,000 passengers and lowered its cost of available seat kilometres (CASK) to a competitive 4 cents per seat kilometre.
And Pacheco points out that: “We don’t know of another airline that started 18 all international destinations in 90 days like we did and with a 90% on time performance and not one cancelled flight because the flight is not doing well and you want to cancel it. We have never done that.”
It is an important accomplishment as Pacheco told TC that: “We wanted to establish a strong brand and we think that a strong brand needs to believe in operating flights even when they’re not doing well.”
Backing for the vision
For Arajet, one of the key events in its arrival on the scene was that as the global pandemic was drawing to a close, it was able to get funding from Boston-based Bain Capital – one of the biggest asset managers in North America – becoming one of its aviation portfolio companies – which also includes Icelandair and Virgin Australia – and giving it access to a lot of resources that are need to develop an airline like Arajet.
“They’re hands-on directors of the company and that has been very helpful for a high-performance team to have that behind them and have that level of support,” Pacheco explained.
He noted as well that from the very beginning Bain Capital invested into the vision of Arajet which was critical because if the investor doesn’t have the same vision as the founder, then it is very difficult “to try and create something when you have an investor with a vision and a founder with another vision.”
Pacheco also told TC that “even though Arajet is a small carrier that was just born, I don’t think many airlines can say they have this kind of backing behind them and I think that that’s a game changer that puts you in a very competitive environment when you are going to go and shop for resources – you’re not only a small Dominican carrier, you are a Bain Capital portfolio company.”
It’s also that kind of backing that enabled Arajet to buy 20 Boeing 737 Max 8s, 15 options and lease 10 for 12 years.
Unlike other airlines that “grow very slowly, one plane here and another plane there,” Pacheco said “we’ve got 45 planes coming our way and having that level of backing is definitely a game changer because it allows you to plan for the expansion of your plan.”
A footprint in Canada
As for Canada, Pacheco told TC that the carrier has sold 10,000 tickets so far and 58% of those tickets are being used to go beyond the Dominican Republic to other destinations on Arajet’s route network, which includes Mexico City, Cancun, San Salvador, Guatemala, San Jose (Costa Rica), Medellin, Cartagena in Colombia, Lima in Peru, Buenos Aires, Argentina, São Paulo, Brazil and Santiago de Chile, also Aruba, Curacao, St. Martin and Jamaica.
That’s all before Pacheco and his team visited Canada in late September, with the carrier’s CEO noting that: “I think that without even having [visited Canada] we’ve sold 10,000 tickets which is a good sign that Arajet has a footprint and has credibility.”
Pacheco was also in Canada to connect with the travel trade, telling TC that: “We are very open to working with travel agents and with tour operators and if one of our travel providers has created some packages and wants to sell them partnering up with our services, that’s fine. We see the travel trade as our partners.”
Talking with Pacheco it’s pretty clear that he has plans to grow the carrier, observing that “We’re doubling our fleet in one year. We’re going to transport more than 500,000 passengers in 2023. We’re looking to transport 1.5 million passengers in 2024. Our aspirations of growth are high. And I want to point out that in 2023 that is without the US market because we have just recently applied to the U.S.”
Stay tuned there’s bound to be lots more from Arajet and for those agents who want to connect with the carrier, email – [email protected].