Grupo Aeroportuario del Sureste (ASUR) estimated Mexican airline traffic would need until the end of 2012 to recover from the failure of local carriers, including Avolar, ALMA de Mexico and Mexicana de Aviacion (informador.com.mx, 24-Jun-2011). The airport operator estimated that airline failures have cut traffic in Mexico by almost 10 million passengers and cut more than 100 aircraft out of service and as many as 20 million seats. Aeromexico, Interjet, Volaris and other carriers have increased capacity to compensate, but have been unable to make up the majority of the difference.
ASUR: Airline failures have taken 20 million seats out of Mexican market
You may also be interested in the following articles...
LATAM Airlines Group is the latest in the region to build an arsenal to combat the LCC threat
LATAM Airlines Group is taking a major step to sustain its leadership in Latin America through the introduction of a new fare structure on domestic routes in its South American domestic markets. This move is to ensure that it remains competitive as existing and potential new low cost airlines aim to establish a foothold in the region.
The company’s plans emerged just as Copa Airlines decided to transition its Colombian operations to a low cost model – Wingo – and the Viva Group set its sights on launching its third Latin American low cost airline in Peru during early 2017. Airlines within LATAM have leading positions within those countries. Over the long term LATAM expects rapid leisure passenger growth in Latin America, and is establishing a framework to compete for those customers.
Key to LATAM’s execution of its new fare structure is cost efficiency, and the airline has cited several ways to achieve lower costs – including the expansion of direct sales, improved productivity and a marked increase in aircraft utilisation – in order to attain unit costs to compete with new low cost competitors.
Copa Airlines: returning to positive unit revenue as its crucial LCC transition in Colombia begins
Cautious optimism exhibited by Copa Airlines at the end of 2Q2016 that challenging conditions in Latin America were showing some signs of improvement has turned into a full-blown declaration that the worst is over in the region. Although yields remain depressed, Copa turned a corner in its passenger unit revenue performance in 3Q2016, posting positive results driven by healthy load factors. Copa continues to experience strengthening demand, and believes it is only a matter of time before yields turn a corner.
The changing conditions have resulted in Copa issuing a slight upward revision to its margin guidance for 2016, and the airline has outlined a framework for restoring its operating margins to the high teens during the next couple of years. Copa’s preliminary growth project for 2017 is an ASM increase of approximately 5% driven largely by aircraft ultilisation.
As optimism builds that Latin America is starting to turn an economic corner, Copa is undertaking a strategic business move by shifting its business model in Colombia to a low cost operation. The new entity Wingo is debuting in Dec-2016; Copa holds the view that the shift in business model is low-risk, and highlights the fact that Wingo does not carry the same challenges as low cost subsidiaries created by other airlines.