Baggage allowance issue is ‘a good populist topic’, how Chatbots are now ‘a core part of business as usual’ and the ‘overwhelming adoption’ of basic economy fares – more insights from CAPA’s Latin America Aviation & LCCs Summit

The Latin American aviation industry is undergoing some dynamic changes. Airport and airspace infrastructure is improving, and airline operating efficiencies are rising. Airport privatisation processes are well underway and the global alliances framework is well established. Open access arrangements are taking hold and regional economies are recovering, driving a buoyant travel demand picture.

But Latin American’s full service airlines could be performing better, particularly in the mission to unlock top line revenue improvements. What are the strategies the region’s airlines should be adopting, based on best practice from other regions and other sectors? Can they better leverage data, loyalty, distribution and ancillaries to produce better revenue outcomes and thereby drive improving profitability?

Meanwhile a crop of new low cost carriers continue full steam ahead, opening up exciting new markets in their efforts to stimulate traffic in the region. But like their full service counterparts, they too face their own hurdles, with infrastructure constraints, high costs and an underbanked population potential stumbling blocks to further growth.

The CAPA Latin America Aviation & LCCs Summit, returning for a third year, has this week attempted to tap into the latest industry issues and developments, challenging leaders of the Latin American aviation industry to reflect on what is needed to drive the industry forward.

The event, hosted at the Santa Barbara Beach & Golf Resort Curaçao, brought together hundreds of aviation and travel executives from airlines, airports and suppliers to explore relevant issues, as well as the commercial and operational pillars underpinning strategic decision making at local and international carriers.

Here’s more insights from the event:

Baggage allowance issue is ‘a good populist topic’
Azul chief revenue officer Abhi Shah stated the issue of whether it should be mandatory for Brazilian airlines to provide free checked baggage allowance is “a good populist topic” and “a good talking point” for politicians. Mr Shah said the proposal is “very limited in its thinking”, does not help consumers and is used as a political tool.







Most airlines want to become retailers: ATPCO regional director
ATPCO regional director Latin America Marcelo Freire stated most, if not all, airlines want to become retailers and have better control over their own offerings. Mr Freire said airlines want to improve the shopping experience for their customers, regardless of the sales channel.

Road travellers in Peru should be ‘easy pickings’ for LCCs and there is ‘clearly suppressed demand’ in Argentina
ICF Aviation principal Carlos Ozores stated there is “no substitute for flying” in Peru due to the country’s mountainous geography and long journeys by road. Mr Ozores said passengers currently travelling by road should be “easy pickings” for LCCs. Meanwhile, he said there is “clearly suppressed demand” in Argentina and there should be greater propensity to travel in the country. Mr Ozores said there is “space for much more capacity than what’s currently there” and a need for air services to replace long road journeys.

Kiwi.com has a ‘completely different business model’ from other OTAs
Kiwi.com head of airline partnerships Marco van Ieperen stated Kiwi.com has a “completely different business model compared to other OTAs” as it focuses on providing a service guarantee to passengers for a fee, rather than on collecting airline commissions. Mr van Ieperen said the company’s relationship with airlines concentrates more on data acquisition.

Taxation is ‘a key issue’ for travel in the Caribbean
interCaribbean Airways CEO Trevor Sadler stated taxation is “a key issue” for travel within the Caribbean. Mr Sadler said the regional aviation sector could grow “a hell of a lot quicker” if taxes were rationalised and airlines were not treated as a source of profit for governments and airports.

‘Brazil is going to grow’, but will be ‘volatile’
Azul chief revenue officer Abhi Shah stated the Brazilian market “is going to be volatile” and the airline needs to “try and build something that’s resilient”. Mr Shah added that he is optimistic that “Brazil is going to grow” and Azul can account for more than 50% of that growth.

‘Localisation is of key importance’ for payment options
UATP director sales implementations Robson Rodrigues stated offering localised payment options for travellers is no longer optional, commenting: “localisation is of key importance”. Mr Rodrigues said airlines can “miss a big chunk of the market” is they do not offer preferred payment options, noting that many markets do not have a high usage of bank cards.

Flycana facing strong growth prospects, but will require ‘significant’ funds
ICF Aviation principal Carlos Ozores commented on the planned launch of Flycana, noting the Caribbean is “poorly served” and the Dominican Republic has “very strong growth prospects”. However, Mr Ozores said the airline will require a “significant amount of money” to support its growth and its potential routes are “quite limited”.

Chatbots now ‘a core part of business as usual’
Caravelo CCO Jonathan Newman stated chatbots are now “a core part of business as usual” across many industries and airlines no longer see them as new and innovative.

IATA: NDC adoption ‘will accelerate sooner rather than later’
IATA regional director financial and distribution services Americas Alicia Lines predicted New Distribution Capability (NDC) adoption “will accelerate sooner rather than later” as large carriers are seeking growth in the volume of NDC transactions. She stated NDC is beneficial, but implementation can be costly for airlines. Ms Lines added NDC adoption will become easier and cheaper for smaller carriers as it matures.

LOOK OUT… Exclusive executive interviews from Curaçao will be published on CAPA TV in the coming weeks, as well as full coverage of the agenda sessions.

Copa Airlines focusing on thin, underserved markets; expecting ‘lots of competition’
Copa Airlines SVP commercial and planning Dennis Cary stated Copa is “at our core a connecting airline”, highlighting that 81% of the origin to destination markets served by Copa have 20 or fewer passengers per day each way. Mr Cary said the strategy of focusing on thin, underserved origin and destination markets will be challenged by new aircraft technology enabling nonstop routes and new connecting hubs being developed by competitors. Mr Cary stated: “We’ll continue to see lots of competition”.

It is ‘tricky to find a balance’ under Caribbean air services restrictions
Winair president and CEO Michael Cleaver stated it is “tricky to find a balance” under bilateral air services restrictions within the Caribbean. Mr Cleaver said there is a need for connectivity and “inter Caribbean cooperation” through partnerships.

Air Antilles does not expect LCCs to enter the Caribbean market
Air Antilles CEO Serge Tsygalnitzky stated he does not expect LCCs to enter the Caribbean regional market, commenting: “There is no space for it”. But, he said  there is a “huge need for connectivity” within the Caribbean and it is “extremely difficult” to connect in the region. Mr Tsygalnitzky attributed the lack of connectivity to the small size of most airlines, networks primarily connecting countries with the same colonial history and language, “extremely small” traffic flows and “absolutely outrageous” taxes which can make air travel products “impossible to sell”. Mr Tsygalnitzky also said securing air traffic rights can be “a struggle”.

ERJ145s enable interCaribbean to increase capacity and add destinations
interCaribbean Airways CEO Trevor Sadler stated the airline’s Embraer ERJ145 aircraft enable it to add capacity on certain routes while offering the opportunity to expand its footprint to new destinations. The airline plans to expand operations from eight to between 10 and 12 destinations by the end of 2019. New destinations will include Saint Thomas and Saint Croix.

MORE INSIGHTS…
CAPA – Centre for Aviation members were able to see live updates from the CAPA Latin America Aviation & LCCs Summit and have access to over 100 briefs from the event. Find out more about how a CAPA membership provides a front row seat to global aviation news, analysis and data as it happens, with access to a comprehensive suite of tools that can be customised to your needs.

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