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The spotlight is not only ready to shine on the World Cup in Latin American next year; it is also beginning to shine on the Latin American aviation market. The global aviation market is starting to wake up to the size of the opportunity in the Latin America, which was again highlighted by the latest figures from Airbus and IATA.
According to IATA Latin American carriers posted a growth in passenger demand of 8.3% in September, capacity grew 6.1% while load factors rose 1.7% to 80.9%. Likewise freight increased 3.9% year on year in September, higher than all the other global regions with the exception of the Middle East. The figures for the Latin American region have been above the global average for the last two to three years, and are being driven by the strong economic growth in the region.
The latest figures from Airbus suggest that the strong growth in traffic over the last few years looks set to continue, illustrating the long term potential for the region: “the Latin American market needs over 2,300 new aircraft in the next 20 years”. Airbus highlight that a “growing middle class and increase consumer spending” is driving the demand. The manufacturer’s latest Global Market Forecast (GMF) provides some fascinating statistics:
- Economic growth in Latin America is currently 3.6% for the last two years compared to the global average of 2.6%.
- Traffic growth in the next 20 years is expected to outperform the world average of 4.7% with an annual growth rate of 5.2%
- Intra-regional and domestic traffic is expected to grow at an impressive rate of 6.3%
- Latin America’s middle class will grow to represent more than half of the population of 2032
- Low Cost carriers account for nearly 40% of the market share of the total air traffic in the region, up from just 12% in 2003.
Last year at Routes Americas in Cartagena, there was real optimism surrounding the Latin American market and I suspect this to be the same in El Salvador, the hosts of Routes Americas in 2014. Last year Estuardo Ortiz, Chief Commercial Officer of AviancaTACA described the phenomenal rise of the carrier with 45 new routes in 3 years, nearly 1 route every month, but he also raised some of the issues around coping with such high growth rates such as airport capacity. He went on to highlight that the Colombia’s main gateway has a theoretical capacity of 14-16 million passengers, but the actual number of passengers is over 25 million.
This year the Routes America’s Strategy Summit is again attracting many of the key players from the Latin American market and it will be fascinating to see whether the optimism for the Latin American market is still as strong and whether the challenges of accommodating the growth are beginning to be addressed.
Routes Americas is taking place on the 23rd- 25thFebruary 2014, during the next 3 months running up to the event we will be reviewing the Latin American market, looking at some of changes in the airline structure in Latin America, profiling some of the airline and airports in the market. So make sure you get a greater understanding of the second fastest region in the world, read THE HUB, search Routesonline and join us in Routes Americas.