Carriers in the Latin America/ Caribbean region continue to see a recovery in fortunes and operations as the resurgence of Brazil’s economy—the region’s largest—since the end of 2016 has led to a better economic outlook, subsequently pro-
ducing improved passenger and air freight traffic.
While the pace of growth so far in 2018 has slowed
compared with the same point a year ago, it is nonetheless reflective of a region barrelling towards a forecast
$900 million in net profit for full-year 2018, according
to IATA’s mid-year 2018 economic projection released in
early June. If that figure is realized, it will be an 80% increase over the $500 million net profit the region’s carriers
earned in 2017, and a considerable turnaround from the
$1.6 billion in losses reported in 2015.
Reflecting traffic through April 2018, the Latin American & Caribbean Air Transport Association ALTA reported year-to-date (YTD) traffic growth of 7.7% compared
to the same period in 2017, slowed from the 8.4% YTD
growth in traffic of April 2017. Te pace in year-over-year
(YOY) growth in passengers has also slowed compared to
last year, but remains significantly strong at 4.4%. IATA is
forecasting 6.5% YOY growth in traffic for full-year 2018
for the entire Latin American region, with overall capacity
growth of 6%.
Extra-Latin America traffic growth YTD (to North
America, Europe, Asia-Pacific and Africa) is up 12.4% YOY
and domestic and international traffic (intra-Latin America)
YTD is up 5.8%. Traffic to/from North America makes up
the largest portion of extra-Latin America traffic, and thus
far in 2018 movement between the two regions is up 12.9%.
Te YTD rise in traffic is even more dramatic between Latin
America and Asia-Pacific (up 43.3% YOY) and Africa (up
59.7). ALTA noted the rise in Asia-Pacific traffic was “largely
due to new connectivity options that Mexico is offering in
this region” and said traffic to/from Africa is benefiting from
42 direct flights each month. Europe is the region’s second-largest extra-Latin America market; YTD traffic to/from the
region is up 6.1%.
Air freight traffic in the region, however, is booming,
as freight volumes have recovered since early 2017 coinciding with economic improvement in Brazil. Year to
date through April, overall air freight traffic among Latin
American carriers is up 10.7%, with international air
cargo traffic up 11.7% YOY.
Regional connectivity, improved airport and ATC infrastructure, and an influx of LCCs luring passengers in remote
regions away from long-haul bus journeys have been among
the loudest of buzzwords among Latin American aviation industry leaders during the past year. Argentina has launched
a reported $1.3 billion overhaul of its domestic air transport
infrastructure, and new LCCs , including FlyBondi and
Norwegian Air Argentina, have taken root in the country,
enticing new customers to air travel in lieu of long-haul bus
rides. Te same bus-to-airline conversion business concept
is also being pursued in Mexico’s heavily competitive LCC
market, as Volaris, VivaAerobus and Interjet out-do each
other with lower fares, which, combined with rising fuel
prices, have resulted in net losses for all three carriers in the
first quarter of 2018. Even Grupo Aeromexico, now focusing
on transborder markets as part of its joint venture with Delta
Air Lines, posted a net loss in 1Q 2018, largely citing rising
fuel costs and exchange rate losses.
But strong passenger demand is boosting revenues and
profits for the region’s other major carriers. Brazil’s second
and third largest carriers Azul and GOL posted revenue increases of 17.8% and 14.4% in the 2018 first quarter. Azul
earned a record $64 million net profit, more than tripling
its net income a year earlier. GOL posted a $67 million
net profit and a 17% operating margin, the LCC’s highest
first-quarter margin in 1 2 years. And Panama-based Copa
Holdings, parent of Copa Airlines, Copa Airlines Colombia and Colombian ultra-LCC Wingo, lorded over the region with a $136 million net profit for the quarter, a 35%
increase over its 1Q 2017 results.
After a long spell impacted by regional economic turmoil, Latin American
airlines see the return of normal operations. BY MARK NENSEL
ANALYSIS: LATIN AMERICA