Iberia sees opportunity in Latin America (with or without Air Europa)
Iberia has announced that its seat count to Latin America in 2024 will be up by 16% on 2023 (its highest ever capacity in that market) and up by 20% on 2019.
According to data from CAPA - Centre for Aviation and OAG, the Spanish flag carrier will offer 5.3 million seats to Latin America this year, compared with 4.6 million in 2023 and 4.5 million in 2019.
Iberia is the leading airline on Spain-Latin America routes, with 39% of seats in the week of 17-Jun-2024, while Air Europa is second with 21%.
If the acquisition of Air Europa by Iberia's parent IAG is approved, Iberia could control 60% of this market (subject to any regulatory remedies).
Regardless of the Air Europa deal, Iberia's growth this year demonstrates its belief that value-creating returns are once more available in post-pandemic Latin America.
- Iberia has 39% of Spain-Latin America seats, Air Europa has 21%.
- Spanish airlines have 70% of seats.
- Iberia codeshares with four other operators, most notably with LATAM Airlines.
- Air Europa has 19 Spain-Latin America routes, one more than Iberia.
- Iberia is sole operator on four of its 18 Latin America routes and leader on 13.
- Iberia has lagged Spain-Latin America market growth, so has lost seat share over the past five and 10 years. However, it is gaining share in 2024 versus 2023.
Iberia has 39% of Spain-Latin America seats, Air Europa has 21%
Iberia is the leading airline by seats between Spain and Latin America, with a seat share of 39% in the week of 17-Jun-2024 (source: CAPA - Centre for Aviation/OAG).
Second-placed Air Europa also has a significant share of this market, with 21% of seats.
If the acquisition of Air Europa by Iberia's parent company IAG receives regulatory approval, the combination of the two leading airlines on Spain-Latin America routes will have a seat share of 60% (although regulatory remedies could potentially reduce this).
Spain-Latin America: top 10 airlines ranked by seats, week of 17-Jun-2024
|
Rank |
Airline |
Seats |
Seat share |
|---|---|---|---|
|
1 |
103,936 |
38.6% |
|
|
2 |
57,492 |
21.3% |
|
|
3 |
22,425 |
8.3% |
|
|
4 |
21,798 |
8.1% |
|
|
5 |
18,198 |
6.8% |
|
|
6 |
10,368 |
3.8% |
|
|
7 |
9,084 |
3.4% |
|
|
8 |
6,675 |
2.5% |
|
|
9 |
5,892 |
2.2% |
|
|
10 |
4,228 |
1.6% |
|
|
All others |
2.6% |
Spanish airlines have 70% of seats
The leading Latin American airlines in this market are Avianca, LATAM Airlines and Aeromexico, each with seat shares in the 7%-8% range.
Overall, Spanish airlines have 70% of Spain-Latin America capacity, while Latin American operators have 28% (the balance of 2% is with Emirates Airline and Air China).
Iberia codeshares with four other operators, notably LATAM Airlines
Iberia has codeshare agreements with four airlines that compete in this market: LATAM Airlines, Avianca, Boliviana de Aviación and the Spanish operator World2Fly.
The most significant of these agreements is with LATAM. Iberia carries its LA code from Madrid to a number of destinations in Spain and across Europe.
Iberia also carries LATAM's code on five Madrid services to Latin America. These include three on which LATAM also operates - São Paulo, Lima and Santiago (Chile) - and two others, Bogotá and Rio de Janeiro.
LATAM carries Iberia's IB code to a number of destinations in Peru and South America beyond Lima, and one in Chile from Santiago.
Codeshare services operated by Iberia and carrying its other partners' codes are mainly only a limited number of routes from Madrid to destinations in Spain.
The 16 airlines operating between Spain and Latin America consist of six airlines from Spain, eight from Latin America, and two from other regions (Air China and Emirates).
Air Europa has 19 Spain-Latin America routes, one more than Iberia
Although Iberia is the leader on Spain-Latin America by seat capacity, Air Europa is the leader by number of routes in this market, with 19 compared with Iberia's 18 (week of 17-Jun-2024, source: CAPA - Centre for Aviation/OAG).
Both have increased the number of routes by one since the equivalent week of 2019, five years ago, and both airlines had 12 routes in the equivalent week of 2014, 10 years ago.
The total market has grown to 37 routes, from 35 in Jun-2019 and 27 in Jun-2014.
Spain-Latin America: number of routes operated by Iberia and Air Europa in June, 2014, 2019 and 2024*
|
16-Jun-14 |
17-Jun-19 |
17-Jun-24 |
|
|---|---|---|---|
|
12 |
17 |
18 |
|
|
12 |
18 |
19 |
|
|
Total market |
27 |
35 |
37 |
Iberia is the sole operator on four of its 18 Latin America routes and leader on 13
Iberia is the sole operator on four of its 18 routes to Latin America, but other airlines compete on the other 14.
On one of these (Madrid-Santiago), the only competitor is a codeshare partner (LATAM).
Two of the monopoly routes are services operated by Iberia on behalf of IAG's long haul low cost brand Level.
Iberia is the leading airline by seats on 13 of its 18 routes.
Five of its routes are a duopoly with Air Europa, while one is a duopoly with LATAM and one a duopoly with Iberojet.
Iberia competes with Air Europa on 12 routes.
Iberia: Spain to Latin America routes ranked by its seat capacity, week of 17-Jun-2024
|
Rank |
Origin |
Destination |
Weekly frequency |
Seats |
Competitors ordered by seats |
IB seat share |
|---|---|---|---|---|---|---|
|
1 |
Bogotá El Dorado |
21 |
7,308 |
45% |
||
|
2 |
21 |
7,308 |
58% |
|||
|
3 |
17 |
5,866 |
53% |
|||
|
4 |
Lima Jorge Chavez |
13 |
4,524 |
46% |
||
|
5 |
Santiago |
11 |
3,828 |
52% |
||
|
6 |
GRU São Paulo Guarulhos |
11 |
3,414 |
35% |
||
|
7 |
7 |
2,436 |
80% |
|||
|
8 |
Montevideo Carrasco |
7 |
2,086 |
63% |
||
|
9 |
Santo Domingo Las Americas |
7 |
2,086 |
41% |
||
|
10 |
7 |
2,086 |
100% |
|||
|
11 |
7 |
2,086 |
62% |
|||
|
12 |
Rio de Janeiro Galeão |
6 |
1,788 |
100% |
||
|
13 |
Barcelona |
6 |
1,788 |
100% |
||
|
14 |
5 |
1,490 |
25% |
|||
|
15 |
4 |
1,192 |
39% |
|||
|
16 |
3 |
894 |
50% |
|||
|
17 |
Havana Jose Marti |
3 |
894 |
17% |
||
|
18 |
Barcelona |
Santiago |
3 |
894 |
100% |
|
|
Total |
159 |
51,968 |
39% |
Iberia has not kept pace with Spain-Latin America market growth…
Iberia's announcement of double digit capacity growth to Latin America, both year-on-year growth and by comparison with 2019, indicates its strong recovery from the COVID-19 pandemic.
Nevertheless, its growth in the five years since 2019, and in the decade since 2014, has not matched that of the overall Spain-Latin America market.
According to data from CAPA - Centre for Aviation/OAG, annual seat capacity in this market in 2024 is scheduled to be up by 22% versus 2019 and by 79% versus 2014.
From the same data source, Iberia's seat count is scheduled to be up by 19% versus 2019 and by 58% versus 2014.
Air Europa has grown by only 8% since 2019, but by 72% since 2014.
Avianca's capacity to Spain has grown by 73% since 2014, while LATAM's is up by 151% and Aeromexico's by 263% over the same period.
Spain-Latin America annual seat capacity and growth, 2014, 2019 and 2024
…and so it has lost seat share over the past five and 10 years…
Iberia's seat share of Spain-Latin America is scheduled to be 39% in 2024 - down from 40% in 2019 and 45% in 2014.
Air Europa's 2024 seat share of 22% compares with 25% in 2019 and 23% in 2014. Avianca's share has been relatively stable, at around 9%, while both LATAM and Aeromexico have increased their share over the past 10 years.
…but is gaining share in 2024 versus 2023
Although Iberia's share of Spain-Latin America seats has fallen over the past five years and the past 10 years, it is outpacing market growth in 2024.
According to CAPA - Centre for Aviation/OAG, its capacity is up by 15% in 2024 (close to the figure of 16% announced by Iberia), while market capacity is up by 12%. Its 2024 seat share of 39% is up by 1ppt year-on-year.
Moreover, it is growing faster than Air Europa this year and has outpaced its leading competitor's capacity growth in the five years since 2019.
Iberia focuses on return on investment, not on growth, for its own sake
Since the formation of IAG in 2011 and the subsequent restructuring of Iberia, Spain's flag carrier has focused on profitability and return on invested capital.
Growth and market share are not ends in themselves, but means to an end if they can be achieved profitably.
Meanwhile, IAG has suggested a new package of remedies to the European Commission in its bid to win regulatory approval for its acquisition of Air Europa.
These are aimed at alleviating the commission's concerns that the deal could restrict competition on certain domestic routes and on international routes from Spain, both short haul and long haul, including some to Latin America.
IAG is only likely to proceed with the deal if the Commission's final decision - expected in late Jul-2024 - on remedies allows Iberia to generate a suitable return on its investment.
Iberia's Latin American capacity growth in 2024 indicates that it sees profitable expansion opportunities, even without Air Europa.