CAPA Live: can Brazil offer clues as Latin America opens?


This report is based on material presented at CAPA Live on 14-Oct-2020. (The next monthly CAPA Live will be on 11-Nov-2020).

Much of the world has some sort of recovery scenario from COVID-19, but Latin America is different.

A significant portion of the region has remained closed off to air travel, starting in Mar-2020, and the restart process has been occurring during the past couple of months. The next few weeks will be crucial to gauge Latin America’s path to recovery. 

One country that has remained open during the pandemic is Brazil. Its passenger levels, while low, are starting to climb, and two of its largest operators have been adding capacity back at a solid rate.

However, traffic still remains solidly depressed, and Brazilian airlines and other operators in Latin America may have to join their counterparts worldwide in engaging in testing schemes as a means to accelerate a recovery in demand. 


  • Traffic in Latin America remained stubbornly on the bottom in Apr-2020 and May-2020 before starting to move in Jun-2020. With markets opening up, traffic growth in the coming months will be scrutinised. 
  • Brazil could offer some clues about a rebound in traffic in other markets in Latin America that are starting to open back up, but airline operators are likely to inject low fares in the market to entice customers to resume air travel, and testing may also need to begin.

This report is based on material presented at CAPA Live on 14-Oct-2020.
The next monthly CAPA Live will be on 11-Nov-2020.

Will traffic in Latin America get a kick-start, now that markets are opening up? 

Most markets in Latin America have restarted their commercial aviation operations and Colombia and Peru are in the midst of restarting international flights. 

Those mass closures of airspace resulted in traffic in Latin America hitting bottom in Apr-2020 and May-2020, before starting to gain traction slowly in Jun-2020.

But in Aug-2020 traffic was still down significantly – more than 75% – and it will be interesting to see if the increases accelerate now that markets are reopened and some international services are resuming. 

Latin America: total RPK growth from 2017 to Aug-2020 

A regional outlook discussion at the recent CAPA Live October 2020 indicated that perhaps Brazil could offer some clues about how demand could trend in markets in Latin America that have recently opened up. 

Brazil’s traffic is still sharply down, but its recovery has been more pronounced than the rest of Latin America's due to the fact that its domestic airspace never completely shut down, and two of its largest airlines – Azul and GOL – have been steadily adding back more capacity than other operators worldwide. 

Brazil's total RPK growth from 2017 to Aug-2020 

Azul expects to reach 55% of its 2019 capacity levels in Oct-2020, and previously it stated that its capacity for Dec-2020 would reach 60% of levels a year ago in 2019.  

In Aug-2020 Azul stated that average fares had come up nicely, and demand volumes remained steady as fares increased. However, those fare increases remained off a low base. 

GOL has stated that it plans to resume 80% of its pre-crisis network and frequencies by the end of 2020, and believes some corporate demand could return in late 2020. With the potential return of some business traffic, the airline has also said that it could resume somewhat normal booking curves.

The airline stated that booking windows had shrunk to 20 days during the pandemic, compared with 60 to 90 days under normal circumstances. 

See related report: Latin America reopens and airlines try to gauge demand 

While that commentary is welcoming and encouraging, the reality is that data from ANAC show that domestic passenger levels in Aug-2020 dropped by 72% year-on-year, even as traffic for Azul and GOL is growing sequentially on a month-to-month basis. 

Will discussions about testing ensue as Latin America opens back up? 

CAPA’s capacity projection model shows that by the end of Dec-2020 Brazil’s domestic seats will be at 51% of 2019 levels; but international seats will be at just 16%, reflecting the patchwork of border closing and quarantines worldwide. 

Moving into Jan- and Feb-2021, domestic seats will fall in the mid 40% range of 2019 levels, and international seats will remain in the mid teen range. 

Azul has stated that the strongest travel season in Brazil is about to start, and improvement in domestic passenger demand is continuing to improve. 

Similarly to the situation in many Latin countries, at least part of Azul and GOL’s targeted passenger base is switching bus passengers to air travel, and Azul in particular serves many routes that its competitors cannot operate to because of a lack of smaller aircraft. The airline has calculated that it has a leading position in 73 of the 106 domestic destinations that it serves. 

With the global message being that air travel is safe, and from having an attractive price point, Azul could be positioned to continue to reap the benefits of a recovery in Brazil; however, demand patterns could change once the busy travel season in the country comes to an end. 

There is little reason to doubt that as other countries in Latin America are in the initial phases of opening up, airlines will inject low fares into the market to entice travellers back onto aircraft to stimulate demand. 

At this point, airlines in Latin America have not given as much attention to testing as operators in other regions of the world. That is likely due to the fact that airspace across the region is just now slowly starting to open back up. 

Discussions about testing among Latin airlines could pick up in the coming weeks, as the global airline industry collectively believes that testing, as well as widespread and reliable vaccines, are the main vehicles to generate a meaningful recovery in demand. 

Airlines in Latin America are now gauging passenger willingness to travel 

Demand in much of Latin America was non-existent from Mar-2020 to just a few weeks ago as countries shut down commercial and international airspace to stop the spread of COVID-19. 

Now the virus is remaining stubbornly present worldwide, and governments in Latin America are opening up their respective airspace while balancing public health issues. 

Trends in demand will be watched closely in the coming weeks as airlines work to gauge the comfort level of passengers returning to air travel. 

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