The Bold New World of Latin American Aviation

June 16, 2022

The gorgeous rising mountains and vast green stretches of untouched jungle that make up the landscape of the Caribbean and Central and South America are a significant reason tourists regularly flock to this part of the world. However, this same magical topography has also contributed to a local transportation woes. When roads and railways cannot suffice, the local aviation industry has risen to the challenge. 

 

Unfortunately, the landscape has proven challenging for smaller, regional operators. Most Latin American countries are home to one or two dominant companies, with American-based corporations like American Airlines and Delta picking up the rest. This has meant most regional outfits have required high costs and have been left with limited reach. However, change is coming; a rapid rise of efficient, low-cost carriers is already upon us—some born from creative financial restructuring and alliances forged with larger partners.

 

In order to become successful, new businesses must find gaps in the current market. In Mexico for example, Volaris is now a competitor to AeroMexico through its low cost fares—a model similar to Spirit in the US. Similar companies have also popped up in Colombia and Chile. 

 

Outside events can also sometimes force unexpected changes. In the US, the fallout from the 9/11 terrorism attacks forced many airline carriers to financially restructure and file for bankruptcy. This resulted in a drastic reduction in efficient practices. The COVID-19 pandemic appears to have forced a similar change across Latin America. Several larger companies have now filed for bankruptcy protection and are looking to emerge soon with stronger balance sheets, and more competitive fares. 

 

Alignments with global carriers have also placed smaller companies in a better spot. Delta is now partnered with LATAM, and American has invested in Chile’s JetSmart. This has provided both with additional capabilities and global reach. It all adds up to a projected annual growth rate of 5%. This could not come at a better time, as tourism throughout the area continues to rise in popularity.

 

GCG Group is well-equipped to meet and exceed the expectations of international travelers as well as the global conglomerates investing in our part of the world. Please contact your local office today to learn more.