Brazil: LATAM and Gol tout capacity discipline. Azul looks outward and Avianca Brazil grows share

As Latin America begins a slow climb from economic weakness that has plagued the region during the past two years, airlines operating within, to, and from the area's largest market Brazil are hoping conditions in the country's domestic market stabilise during 2017, after the country's recession has shattered demand in Latin America's largest market.

Brazil's two largest airlines Gol and LATAM Airlines Brazil remain cautious about the country's domestic environment, at the end of 2016 concluding that excess capacity remained on domestic routes, despite their own capacity reductions within Brazil's domestic network. Additionally, neither airline seemed particularly bullish that pricing in the Brazilian market had started to stabilise.

The country's third and fourth largest airlines, Azul and Avianca Brazil, each have fairly robust aircraft order books, which triggers questions about each company's growth strategy for the short and medium term. Azul is expanding its international footprint in South America, including possibly examining the establishment of a larger footprint in Uruguay. Avianca Brazil's major shareholder is turning its attention to other Latin American markets, and the airline's strategy going forward remains somewhat unclear.