LAN Airlines cuts Chile domestic capacity, as World Cup traffic slump adds another hurdle for LATAM

LAN is cutting capacity in its original home market of Chile as part of a move by parent LATAM to reduce domestic operations in most of its markets. The cuts are in response to slower economic growth and the devaluation of several South American currencies.

Chile has been one of the world's fastest growing domestic markets, recording high double digit growth in 2010 through 2013. Growth has slowed significantly in recent months and could be flat or even negative in 2H2014 as LAN cuts capacity.

The upcoming FIFA World Cup is also driving further capacity cuts in Brazil as LATAM subsidiary TAM prepares for a drop in traffic and revenues during the tournament. Unlike Chile, capacity in the Brazilian domestic market has already dropped, with ASKs down 3% in 2013 and up only 1% in the first four months of 2014.