Latin American Aviation Industry in 2023: An Early Overview
Keeping up with our series of articles surveying the health and condition of the Latin American aviation industry, with previous instalments published in May and November of 2022 (here and here), we present now our third article in the same vein. 2023 has started and the industry is looking forward to the scenarios this year is going to bring. This article purports to take a look at the new challenges the industry must face this year and what actions airlines are taking to remain competitive in the region.
Before we can talk about what is happening in 2023, it is always useful to look back and briefly mention what 2022 has brought to the industry. 2022 was a very fruitful time for the Latin American industry, as the passengers’ traffic in December reached pre-pandemic levels: according to ALTA, 32,3 million people used airplanes as a transportation method, which is 99.9% more of the passengers rate transported in December 2019. As for this year, IATA expects the passengers’ demand will grow by 9.3%.
Ministro Pistarini International Airport, Buenos Aires, Argentina
However, even if last year ended on a relatively positive note, there are some challenges that the industry of the region must be able to deal with if a steady growth has to be maintained. The most notorious of these challenges is the political landscape of countries such as Chile and Colombia. According to Peter Cerda, IATA’s Regional Vice President for the Americas, the new governments of these nations don’t always understand how the aviation industry works and the benefits it brings to their respective countries. This conception often materializes into heavier taxes for aviation companies as governments see them as “cash cows”, without recognizing the important role of aviation as a reliable way of transportation, Cerda states. Other usual challenges remain the lack of proper airport infrastructure, ever-growing fuel prices and worldwide inflation.
Regardless of the above, airlines are doing their best to have a good first semester. As part of the strategies to keep things afloat, we can mention the creation of partnerships (even if their creation depends on governments), as it’s the case of several Brazilian airlines that already have built relations with US-based companies. LATAM Airlines Brazil and GOL have launched ventures with Delta Air Lines and American Airlines, respectively. Other airlines, such as Iberia, continue to expand their presence in the region. They expect to increase their weekly services by 23.4%, which means 280 services every week. In annual terms, Iberia plans to have a 5% operations growth between Europe and Latin America. Finally, Colombia’s market has seen the emergence of the low-cost Ultra Air, which just made its debut in February and is directly competing with big carriers such as Avianca and LATAM.
To summarize, it can be said the Latin American aviation industry has shown so far good health. Nevertheless, unpredictable challenges such as government decisions and inflation are still a source of concern for companies. In light of these circumstances, airlines have been keen to tackle these issues by creating partnerships and expanding routes. It is too early to predict if these moves will be beneficial, but it can only be expected the industry will keep showing the same good figures of the last two years.
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