Latin America Aviation in 2017 - Centre for Aviation · Latin America Aviation in 2017 Cartagena, 11-Sep-2017 Peter Harbison Executive Chairman, CAPA –Centre for Aviation. ... LAN

www.centreforaviation.com

Latin America Aviation in 2017

Cartagena, 11-Sep-2017

Peter HarbisonExecutive Chairman, CAPA – Centre for Aviation


The global market• Benign economic conditions have stimulated traffic growth• Broadly profitable industry• Partnerships and alliances are evolving• Factors reshaping networks:

• New (smaller widebody) aircraft change the way route networks operate

• New entrant airlines and subsidiaries • China accelerating internationally• Uncertainty:

• Terrorism, Trump and Brexit• This is a cyclical industry • Prolonged periods of stability are rare


Latin America• With 46 countries, 740 main airports and 385 airlines generalisations

are difficultEconomic and airline performance is improving, with considerable upside – but remains fragile:

2014 -- USD700 million profit2015 -- USD1.5 billion loss2016 -- USD300 million profit

• A generally relaxed view towards ownership and control – although some states are still protective

• Low market penetration by LCCs – but rapid recent expansion (Chile, Peru, Colombia, Costa Rica)


Latin America

• Large potential for further domestic and short haul market growth• Infrastructure and costs are increasingly a constraint on growth• Domestic growth has slowed recently, due to weak economies –

2016 domestic pax down 8%• Internationally, US and European markets and airlines are most

dominant (inbound traffic)• Faster international growth• International partnerships/equity investments becoming more

significant (HNA-Azul/TAP, LATAM-Qatar, Delta-Aeromexicoinvestment and JV and investment in Gol)


TOP 10 Latin AmericaAirlines by seats Brazil’s 3 major airlines generate 35% of LatAm capacity

Source: CAPA – Centre for Aviation, OAG


Colombia: LatAm’s 3rd largestAircraft fleet

Avianca has the largest fleet - with 140 aircraft on order

Source: CAPA Fleet Database


ColombiaMarket growth

Total market growth has been relatively stable over the past two years


ColombiaInternational market

But international has grown faster


US-LatAm: all airlines

US-Latin America is dominated by US airlines with nearly 60% of the capacity


Europe-LatAM

• Europe-Latin America is dominated by European airlines with nearly 2/3 of the capacity

• 6.9% capacity to be added in 2017



Capacity to points outside LatAm

Source: Airline Leader

%age growth


%age growth

Intra-LatAm capacity growth

%age growth

Source: Airline Leader


LATAM has reshaped the alliance profile and

its (proposed) JV with IAG and American

deliver strong market power

Global Alliances & partnerships


Airlines and SubsidiariesAirlines Country of Operation

AeroVip * Argentina

Avianca Columbia

Aerounion Mexico

Avianca Argentina *~ Argentina

Avianca Brazil Brazil

Avianca Cargo Columbia

Avianca Costa Rica Costa Rica

Avianca Ecuador Ecuador

Avianca El Salvador El Salvador

Avianca Guatemala Guatemala

Avianca Honduras Honduras

Avianca Nicaragua Nicaragua

Avianca Peru Peru

SANSA Costa Rica

TACA Peru Peru

LAN Airlines Chile

LAN Argentina Argentina

LAN Cargo Chile

Lan Cargo Colombia Columbia

LAN Colombia Columbia

LAN Ecuador Ecuador

LAN Express Chile

LAN Peru Peru

MasAir Mexico

TAM Airlines Brazil

Airlines Country of Operation

TAM Airlines (Paraguay) Paraguay

Aerolineas Argentinas Argentina

Austral Argentina

Aeromexico Mexico

Aeromexico Connect Mexico

InselAir Curacao

InselAir Aruba Aruba

Volaris Mexico

Volaris Costa Rica Costa Rica

Copa Airlines Panama

Copa Airlines Colombia Colombia

Wingo Colombia

Viva Air Peru Peru

VivaArgentina Argentina

VivaColombia Colombia

VivaAerobus * Mexico

Amaszonas Bolivia

Amaszonas del Paraguay Paraguay

Amaszonas Uraguay Uraguay

DHL Aero Expreso Panama

DHL de Guatamala Guatemala

DHL Ecuador (TransAm) Ecuador

Azul Brazil

Norwegian Air Argentina Argentina

* Currently only operate charter flights~ Due to start scheduled flights in October 2017.


The main players

Subsidiary Country of Operation

Aerounion Mexico

Avianca Brazil Brazil

Avianca Cargo Columbia

Avianca Costa Rica Costa Rica

Avianca Ecuador Ecuador

Avianca El Salvador El Salvador

Avianca Guatemala Guatemala

Avianca Honduras Honduras

Avianca Nicaragua Nicaragua

Avianca Peru Peru

SANSA Costa Rica

TACA Peru Peru

Airline Country of Operation

Avianca Columbia

Subsidiary Country of Operation

LAN Argentina Argentina

LAN Cargo Chile

Lan Cargo Colombia Columbia

LAN Colombia Columbia

LAN Ecuador Ecuador

LAN Express Chile

LAN Peru Peru

MasAir Mexico

TAM Airlines Brazil

TAM Airlines (Paraguay) Paraguay

Airline Country of Operation

LAN Airlines Chile

Licence Agreement Country of Operation

Avianca Argentina Argentina


Regional extension/subsidiaries

Airline & Subsidiaries Country of Operation

Aerolineas Argentinas Argentina

Austral Argentina


Aeromexico Mexico

Aeromexico Connect Mexico


Amaszonas Bolivia

Amaszonas del Paraguay Paraguay

Amaszonas Uraguay Uraguay


Copa Airlines Panama

Copa Airlines Colombia Colombia

Wingo Colombia


Viva Air Peru Peru

VivaArgentina Argentina

VivaColombia Colombia

VivaAerobus * Mexico


InselAir Curacao

InselAir Aruba Aruba


Volaris Mexico

Volaris Costa Rica Costa Rica


Latin AmericaAircraft orders


Latin America’s fleet is currently 2,343 aircraft


Latin AmericaAircraft orders (LCCs)

Nearly half of the orders are for LCCs



Latam LCCs/groups



LatAm LCC penetration


Argentina: Domestic seats/population 2016

• Argentina’s domestic airline penetration is only one third of Mexico’s• Government goal to double domestic traffic in four years (from 2016)• Extensive long distance bus travel ripe for disruption

MEXICO BRAZIL ARGENTINA

0.8 0.6 0.3



• Protectionist policies domestically have restricted air travel

• Regulatory impediments and bureaucracy continue to slow potential

under a new liberal policy Norwegian Air says Argentina is a “hidden

jewel”

• Buenos Aires ATM needs major upgrade

• Infrastructure across the country needs major investment to permit

market growth

Argentina: Impediments to growth


• Argenjet Aviacion

• Avian Líneas Aéreas

• Buenos Aires International Airlines

• Grupo Lasa

• Just Flight (Royal Class)

• Norwegian Air Argentina

• Polar Líneas Aéreas

• Servicios Aéreos Patagónicos (Sapsa)

• Servicios Y Emprendimientos Aeronáuticos (Sea)

Argentina: Startup proposalsAs at 6-Sep-2017

Source: CAPA – Centre for Aviation


• Infrastructure constraints in Latin America to cost USD42 billion over the next

16 years, says IATA

• Who will pay? Airport privatisation? PPPs?

• High charges and taxes limit the potential effectiveness of new low cost

services, preventing lower prices

(eg – Mexico-Monterrey rtn USD91 - taxes and charges USD71 = fare USD20*)

• Economies recovering , but still fragile

• Partnerships and equity investments likely to grow

Enormous market growth potential – especially for LCCs. But…..

* Source: Skyscanner/Expedia


Thankyou

Muchas Gracias!


Latin AmericaSeats/week

• Brazil and Mexico are the largest markets

• US airlines are major players


US-Latam LCCs

US LCCs account for 73% of LCC capacity


No longer foreign airlines


DHL Aero Expreso Panama

DHL de Guatamala Guatemala

DHL Ecuador (TransAm) Ecuador


Azul Brazil


Norwegian Air Argentina Argentina

Documents

Latin America Aviation in 2017 - Centre for Aviation · Latin America Aviation in 2017 Cartagena, 11-Sep-2017 Peter Harbison Executive Chairman, CAPA –Centre for Aviation. ... LAN