Chile's domestic airline market stable as Sky Airline tests the LCC model - and Paravai plans entry

Chile recorded a solid 9.7% increase in passenger growth for the first seven months of 2016, with domestic passengers growing 9% and international passenger growth reaching nearly 11%. Although Chile has not been immune to the economic degradation in Latin America, its economy is more stable than in other countries in the region.

Some changes have taken place in Chile's domestic market during the last year - most notably the transition of the country's second largest domestic airline Sky into a low cost carrier. As it has undertaken a change in its business model Sky's international passenger numbers fell for the Jan-2016 to Jul-2016 time period, but the airline is adding some international markets in 2016 and 2017, upping competition with its familiar rival, LATAM Airlines Group.

Another airline aims to start operations in Chile during early 2017 with aspirations to compete with LATAM and Sky on domestic routes. Paravai Líneas Aéreas may not pose a huge threat, but its ambitions reflect a belief that perhaps Chile's duopoly needs to be shaken up.