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DESTINTIONS Latin America


data reveals a 14% share of domestic passenger traffic for the first five months of 2017 and a 2% share of international passenger traffic. Some domestic operations were suspended this year to allow the airline to consolidate and add frequencies to stronger routes.


Potential for start-ups Nevertheless, the outlook for the carrier and its sister airline Viva Air Peru – which only started operating in May 2017 – is extremely positive following an order for 15 Airbus A320ceos and 35 A320neos at the Paris Air Show in June. It is thought the aircraft will be used to replace old fleet, expand existing operations in Colombia and Peru and provide a platform for potential start-ups throughout Latin America. VivaColombia CEO William Shaw believes Latin America is “a great opportunity for the low-cost model”. He says: “Our biggest dream is to spread


low airfares around Latin America, making travel more accessible to all people. We expect to see rapid market growth in our new market in Peru for the rest of this year as the “Viva Effect” begins to spread through the continent. We will continue to work with all government entities that are essential to the growth of the sector, freeing markets from bureaucracy and stimulating growth to everyone’s benefit.” The LCC sector is certainly having an impact on Latin America. LCCs more than doubled their share of seats flown in South American countries between 2005 and 2016, from 13.7% to 32.2%,


Airlines are paying more attention to Argentina


Brazil is bouncing back


Despite hosting the Fifa soccer World Cup and the Olympics, it has been a difficult few years for Brazil as the country slipped into a long recession. However, financial commentators are finally seeing a light at the end of the tunnel and the optimism is reflected in air traffic figures. A 5.5% decline in domestic traffic in 2016 has been turned around and government figures finally show an increase in domestic RPKs (Revenue Passenger Kilometres) after a long run of falling demand.


Airlines have at least been managing capacity with the result that 2016 saw the highest load factor on record for domestic services at 80.1%. Of the four main domestic carriers, LATAM Airlines Brasil and GOL both have more than 30% of the market. Azul Airlines’ has increased its share closer to 20% while Avianca Brasil has about 13%. LATAM Airlines is by far the dominant carrier when it comes to international RPKs.


according to IATA data. The four main LCCs, Gol, Azul, Volaris and Interjet, are primarily responsible. By the end of the second quarter 2017, Azul shares had gained 27% since its April IPO while shares in Gol Linhas Aereas Inteligentes SA went up 124% January- June 2017. But new entrants are springing up regularly. Aside from the aforementioned Norwegian Air Argentina and Viva Air Peru, there is Santiago-based JetSMART. Backed by Indigo Partners, the airline will also have the stability of the Chilean aviation platform to assist its efforts to grow. It is reported to be already looking beyond the Chilean market, with


Peru of special interest. But Chile, known in the aviation


community for its forward-thinking approach to air transport, is an exception rather than the rule in Latin America. LCC expansion in the region will generally have to counter regulatory complexity, high fuel costs, high airport costs and high taxes. On the face of it, it doesn’t seem like much of a pull. But the region is yet to mature. Trips per capita are a long way behind the rate seen in North America and Europe. A growing middle class, stimulated in their desire to travel through low fares, may well prove the kickstart that aviation in the region needs. From “could do better”, that report


card may well read “excellent work” in the future. £


58 ISSUE 5 ROUTES NEWS 2017 routesonline.com


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