Air connectivity between Latin America and the rest of the world has been on the rise every year this decade and the current northern summer schedules show a fourth consecutive year-on-year growth of around 7%, a The Blue Swan Daily analysis for the inaugural CAPA – Centre for Aviation Latin America Aviation Summit currently taking place in Cartagena, Colombia, has revealed.
The strongest out of region connectivity growth around Latin America continues to be focused on the Caribbean and Central America, which together account for more than three quarters of all the available seats into Latin America. The offering into Central America will be up 7.7% in 2017 and up 62.8% since the start of the decade, while out of region connectivity into the Caribbean will rise 7.1% in 2017, up 40.3% on 2010.
In South America, nonstop capacity from outside of Latin America will rise a much more modest 2.0% in 2017, but this compares favourably to 2016, where a 3.9% decline into lower South America, due mainly to the economic situation in Brazil, influenced an overall 0.2% regional growth return.
Air travel to and from Latin America is understandably dominated by services in and out of North America. The US accounts for 68.5% of the seats into and out of Latin America, and together with Canada that rises to 76.8%, or just over three in every four passengers. USA is included among the four busiest country pairs, including the giant Mexico-USA market that accounts for 23.3% of the total out of region capacity into Latin America. The others comprise USA-Puerto Rico (5.8% share), USA-Dominican Republic (4.7% share) and USA-Brazil (3.5% share).
The Canada-Mexico market is the fifth largest country pair for out of region capacity into Latin America (3.0% share), while Portugal-Brazil is the only trans Atlantic country pairing that provides over one million annual seats into Latin America, but just a 1.2% share of capacity.
Spain is the largest European market linked to Latin America with a 5.9% share and non-stop flows into Colombia, Mexico, Brazil and Argentina of over 500,000 oneway seats. The France-Guadeloupe, France-Martinique and UK-Mexico markets are the only others offering more than 500,000 one-way seats.
While the scale of supply from USA and Canada mean their respectable 5.8% and 7.6% rates of capacity growth into Latin America will deliver the majority of additional seats into the region – three million in the case of the US alone in 2017 – it is the long haul markets that are seeing the largest rates of growth, particularly North East Asia and Europe.
OAG schedule data shows capacity into Latin America from North East Asia will more than double from just over 95,000 annual seats in 2016 to over 215,000 in 2017, buoyed mainly by enhanced connectivity with Japan following All Nippon Airways’ launch of a Tokyo Narita–Mexico City route and Aeromexico boosting its own frequencies on the same route.
It is no surprise to learn that there is also increasing capacity into Latin America from China. This again is being facilitated by Aeromexico which has boosted frequencies on its services between Mexico City and Shanghai. The service which operated via Tijuana in both directions now operates non stop on the eastbound leg from China. All three of these North Asian flights are operated by Boeing 787-8 equipment, highlighting the aircraft’s important role in enhancing connectivity.
For the South Pacific, Travel from Australia and New Zealand to Latin America is in one of aviation’s smaller intercontinental market pairs but is growing, with intra- and extra-alliance partnerships. LATAM will supplement its Santiago-Auckland-Sydney offering with Santiago-Melbourne nonstop, which will give LATAM and its fellow oneworld partner Qantas a one-stop proposition from Melbourne to other South American destinations, including Buenos Aires. Air New Zealand has found a small niche serving the Melbourne-Buenos Aires market via Auckland. Jan-2018 is a peak month, with nearly three daily flights between the regions. Even in the off-peak the offering will produce growth, after being somewhat flat in recent years: Qantas grew but Aerolineas Argentinas exited the market. Aerolineas now partners with Air NZ. Qantas and Air New Zealand are evaluating new widebody aircraft that will let them fly ultra-long haul. This could include the first nonstop flights to Brazil from Australia/New Zealand.
In Western Europe, the second largest geographic region for connectivity to Latin America after North America, a 6.9% capacity rise will add one million additional oneway trans Atlantic seats boosting annual non stop connectivity from 16.3 million to 17.4 million departure seats.
A similar growth of 6.9% from Eastern Europe provides a further 7,000 annual one way seats. Double digit growth rates are being seen in some of the major markets such as Spain (+10.0%) and Portugal (+10.1%), and larger percentage rises in smaller markets such as Italy (+12.8%), Switzerland (+31.4%), Turkey (+24.6%), Finland (+97.8%) and Poland (+61.9%). Elsewhere, there is significant additional capacity into Latin America from North Africa (+62.0%) and Central and Western Africa (+52.2%), albeit from a low base.
This growth is being delivered by expanded offerings from Royal Air Maroc (RAM) and Ethiopian Airlines; the latter also providing direct one stop connectivity from its East Africa home in Addis Ababa. These growth markets are more than offsetting the declining non stop connectivity out of three others.
Capacity into Latin America from Southern Africa is down a modest -2.9% mainly due to cuts in services from TAAG Angola as it consolidated services into Brazil, while services from the Southwest Pacific have been reduced (capacity down -13.9%) after strong growth in 2016.
The Middle East–Latin America market capacity will be down 7.2% in 2017 after Etihad Airways suspended its operations into Brazil in Mar-2017, but this has been partly offset by rises from both Emirates and Qatar Airways.
Within Latin America the standout performers remain Panama and Chile. In Colombia, Cartagena Rafael Núñez International Airport has gained from a proactive approach to aviation with an aggressive reduction in charges bringing a growth in connectivity, most recently supported by the arrival of services from KLM (from Amsterdam), American Airlines (from Miami) and Air Canada (from Toronto).
In terms of connectivity, Chile is achieving intra-Latin America capacity growth of 14.7% in 2017, according to OAG schedules, a growth rate that Argentina will almost match at 13.3%, but will certainly easily succeed in 2018 once its numerous LCC ventures take flight. Belize, on the eastern coast of Central America, also understands the need for connectivity and a 31.7% intra-Latin America capacity rise in 2017 will deliver improved international connectivity through partnerships with both legacy and low fare providers.
Overall, intra-Latin American capacity is growing at a rate of 2.0% in 2017, but there are clear regional variations. In Central America, intra-Latin American connectivity is up 5.1% in 2017, its slowest rate of growth since 2012. Meanwhile South America is also growing at 1.4% despite a -3.5% decline across upper South American nations, a 6.0 ppt reverse following a -4.6% decline in 2016. The Caribbean is also suffering reduced regional connectivity with intra-Latin American capacity down -2.9% in 2017, its third year-on-year decline this decade, although this follows strong growth in 2016.
Nowhere have declines been greater than in Venezuela, where more than USD3.8 billion in airline ticket sales are still being withheld. IATA believes the situation “will get worse before it gets better” due to its current challenging political conditions and has warned that “Venezuela is cutting itself off from the outside world”, as airlines shift capacity to more profitable markets. Intra-Latin American capacity from Venezuela is down almost a third in 2017, slipping below the Dominican Republic, Cuba and Ecuador over the past year in terms of its international network capacity.
Latin America has all the necessary elements to benefit from innovations in aircraft technology and (mostly) liberal market changes. Despite recent economic headwinds there is no reason the region shouldn’t become an aviation success story, especially when it holds many of the key ingredients for success: competitive and efficient airlines, a growing middle class, favourable demographics and a geography that necessitates travel by air.