AVIATION INDUSTRY

IATA: Local issues in Latin America hinder air travel growth

The Latin America-Caribbean region is clearly seeing growth but is hamstrung by insufficient infrastructure and air traffic management, excessive costs and taxation.

Briefing media at its Geneva headquarters, IATA executives said Latin American passenger levels were expected to double by 2034 and the air transport industry’s contribution to regional GDP has the potential to rise from $140 billion to $322 billion.

“The Latin American industry of 2018 bears little resemblance to what it was at the turn of the century. In the last decade alone, the number of passengers carried by the region’s airlines has more than doubled,” IATA regional VP, the Americas, Peter Cerda said. “Looking ahead, over the next 20 years we expect 4.2% average annual growth … over 750 million journeys are expected to touch the region by 2036.”

Latin American carriers like Aeromexico, Copa, LATAM and Avianca are all forging new international ties, bringing an influx of passengers from Europe and North America. And conversely, passengers from the region are taking advantage of new opportunities to connect to the rest of the world.

However, 2018 was a challenging year for the region. While Brazil’s economy continued to recover from recession, other countries’ economies faced new challenges, as both Argentina and Mexico saw currency devaluations against the US dollar. For the airline industry in the region, the strength of the dollar effectively raised the local currency cost of key US dollar-dominated necessities, i.e. oil and aircraft.

Passenger demand among Latin American-Caribbean carriers increased 6% year-over-year (YOY) in 2018, moderating somewhat from the 7.3% YOY jump in demand during 2017. Capacity was up 6.5% YOY, up a full point from 2017’s rise. For 2019, IATA estimates an additional 6% growth in traffic and a 5.9% growth in capacity.

The collective net profit for the region’s carriers, however, is expected to nearly double in 2019, according to IATA’s economic forecast, from $400 million in 2018 to $700 million in 2019…

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