Chile’s rapid domestic airline growth continues but LAN’s dominance remains unchallenged

Growth in Chile's domestic market slowed slightly in 2013 compared to previous years but was again in the double-digits at 14%. Traffic expansion on the country's domestic routes remain among the fastest growing in Latin America as Chile's economy has remained relatively stable during the last couple of years compared with more dramatic fluctuations within Mexico and Brazil.

The only legitimate challenger to LAN's domineering position in Chile - Sky Airline - grew its positioning in the Chilean domestic market during 2013, and improved its load factor. But its loads remain well below the market average, which puts the privately-owned airline in a tough position to become a viable challenger for LAN.

The slowdown in Chile's domestic growth in 2013 reflects the growing maturity of the market and the country's relatively small domestic population of 18 million (versus 119 million in Mexico, 201 million in Brazil and 48 million in Colombia). Compared with other high-growth markets in Latin America, a larger number of Chile's residents already travel by air, making it difficult to tap large numbers of first time flyers to stimulate the market.