Latin America is one of the most promising aviation markets in the world, with ripe opportunities for passenger stimulation.
Airlines operating across all business models in the region are contemplating what the right formula is for capitalising on passenger growth, and as a result, low cost operators are growing in the region. During 2017, a raft of new airlines made their debut and experienced reasonably solid market reception, and low cost airlines are now formidable operators in Latin America"™s three largest air travel markets "“ Brazil, Mexico and Colombia.
One prevalent trend in Latin America is the hybridisation of some low cost airlines as they work to move upmarket and capture more lucrative business passengers.
For example, Brazil"™s first LCC GOL captured a 35% share among Brazil"™s business passengers in 2Q2017. Some ULCCs are breaking traditional moulds as well. Volaris, which has one of the lowest unit costs in the region, is forging a codeshare with Frontier "“ a first for ULCCs operating in the Americas.
As airlines operating under various business models adapt to changing conditions, costs will remain the distinguishing factor for the ULCC model in Latin America. It remains to be seen in Latin America and worldwide whether the fare segmentation adopted by full service airlines and the hybridisation of low cost airlines will result in sustained success, but ULCCs have no intention of relinquishing their cost advantage…