Heading South – Aviation in South America

From the mystical ruins of Machu Picchu in Peru, via the surreal terrain of Bolivia and the friendly red meat eating locals of Argentina, to the hiking paths of Chile… South America truly offers something for everyone.  This massive continent literally has it all, and there is more!  Tourism statistics largely illustrate the attractiveness of the South American market.  In the Americas region, Central and South America continued to show the strongest performances together with the Caribbean.  According to the US Office of Travel & Tourism Industries, US travel to overseas markets increased significantly in the first half of 2012 with travel to Central America up 12 per cent, South America up five per cent and the Caribbean up eight per cent.

Over the past decade, Latin American carriers have become strong competitors on international routes to North America and Europe.  The airlines of the region in general are showing positive increase in capacity and traffic.  ALTA (Latin American and Caribbean Air Transport Association) member airlines announced recently that its members carried 12.9 million passengers in November 2012, up 10.3 per cent from the previous year.

In the past two years, mergers and partnerships have been the name of the game throughout the world, but even more fiercely in the Latin America region with Avianca-Taca coming together and more recently, LAN and TAM. Star Alliance strength in the region is significant with Copa, Avianca-Taca and TAM in this alliance.  With Aeromexico and Aerolineas in SkyTeam, this leaves oneworld, which has traditionally dominated the region, slightly behind with just one arm of the LATAM group, LAN, as a member.  Surely it is likely that TAM will come over to oneworld – this is one to watch.

Farther to the East, international airlines such as the Middle Eastern ‘mega carriers’ are also putting their footprint in South America, either by starting new routes to the region or discussing commercial partnerships with South American-based carriers.  With Emirates Airline and Qatar Airways already serving Sao Paulo and Etihad Airways about to begin service from Abu Dhabi, the links from Asia are growing and will continue to grow as the region’s economy goes from strength to strength.

The rise of new LCCs in the region is also quite spectacular.  VivaColombia project two million passengers in 2013 and Brazilian LCC models such as GOL, Azul and Trip are also taking large chunks of market share.  In Mexico the LCCs (if we can call them that these days – a great topic of debate that will occur at the Strategy Summit at Routes Americas on Sunday 10th February, 2013) are expanding aggressively with new routes announced virtually every week.  In the Southern cone region, BQB Lineas Aereas is also strengthening its position after the demise of Pluna.

The US/Colombian Open Skies agreement that has just come into force is great news for the region.  The number of passenger and cargo flights between the two countries is set to rise during the year-ahead and competition will be boosted, ultimately increasing direct air services possibilities and stimulating the demand for air travel.  Some airlines such as JetBlue Airways and LAN Colombia have already outlined their plans to serve this market by adding new routes and increasing capacity.

With an infrastructure that isn’t as modern as other more developed areas, the South American continent is undergoing massive restructuration and is setting the scene for the next aviation boom.  In a fast growing market, the capability of airports and cities to serve the demand is key and the market will belong in the years to come to those airports capable of developing modern infrastructures, growing their network and integrating efficiently in the urban and regional environments.

Part of this on-going modernisation of the region includes the waves of airport concessions that have been taking place and shall continue to take place in Brazil and perhaps in other countries such as Paraguay.  In Brazil, over the last year, many billions of dollars have been invested by global airport operators in several key Brazilian airports – these foreign airport operator investors include ACSA, Egis and Corporacion America all having teamed up with Brazilian construction companies to win their respective bids.  Will these investments provide significant returns? This remains to be seen but one thing is for certain….everybody wants a slice of the action in Brazil.

Regarding the development of the region, several exiting projects are being delivered as we speak:  The new international terminal in El Dorado, Bogota is up and running; the new wing of the Tocumen Panama International Airport is now operational; there is a brand new airport planned for the islands of Antigua and Barbuda; there is the imminent opening of the new airport of Saint Vincent and the Grenadines and a brand new facility at Quito International Airport opens in February 2013.  

New developments in international and regional airports will really make a difference in the growing market and even help in bringing solutions to existing congestion issues, in Brazil and Mexico, for example.  The path to success for South American airports will be to connect with high-economic international markets and facilitate best connecting services. In a fast changing aviation landscape, airport management companies will need to ensure efficient marketing tactics to reach target airlines and gain new markets.

Need to know more about this exciting market?  Check this: an organisation called The Happy Planet Index has published the first-ever index to combine environmental impact with well-being to measure the length and contentment of life in world countries… and guess what… eight of the top ten countries are in Latin America.


Routes Americas 2021

The route development forum for the Americas
Bogotá, Colombia  9 - 11 February 2021

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