ROUTES AMERICAS: Latin America Drives Aviation Growth in the Americas

The growing economies of the Latin American market continue to drive aviation growth in the Americas region as investment improves both domestically and internationally. This is the conclusion reached by the latest OAG Routes Americas Analysis which has been published at Routes Americas, the largest commercial aviation event for the entire Americas region.

The report highlights the changing aviation environment in North America, Latin America and the Caribbean. In 2011, Latin America achieved 11 per cent year-on-year growth compared to 2010, with the US only achieving 1 per cent year-on-year. The average capacity growth rate since 1998 for Latin America stands at 5 per cent, while in the US capacity has declined by -1 per cent. This imbalance has led to US carriers increasing their presence in the Latin American market.

Rob Shaw, Director of Analytical Services at UBM Aviation - OAG explains: “Our latest data gives a clear picture: Latin America is making its mark on the aviation market in the Americas through increased alliances and passenger growth. Airlines are clearly developing competitive strategies to cope with international competition.”

Given sluggish growth at home, the Latin American market presents a huge opportunity for the US mainline carriers to grow their networks. Consolidation in that market has already begun in earnest with the mergers of GOL and Varig in 2006 and of LAN and TAM in 2011. However, opportunities still exist, not least because many countries in the region are developing their aviation infrastructure to take advantage of the growing travel demand.

Attracted by higher growth rates in the emerging markets of Latin America, in 2011 some US carriers made important advancements in the market such as Delta Air Lines creating its Latin American and Caribbean division, signaling the airline’s intent to grow in the region. Low-cost carrier JetBlue Airways now serves 23 destinations in the region, and the Latin American and Caribbean markets account for around a quarter of the carrier’s capacity.

In the Caribbean, low-cost airlines will continue to grow as carriers such as Southwest Airlines open new routes following their acquisition of AirTran, and the Latin American carriers increase their presence in the region. In the US, economic conditions continue to hamper the mainline carriers from growing capacity, and seat factors remain stubbornly below those of the low cost carriers who saw over 5 per cent capacity growth in 2011. Their growth is forecast to continue into 2012.