LATAM Airlines Group is the latest in the region to build an arsenal to combat the LCC threat

LATAM Airlines Group is taking a major step to sustain its leadership in Latin America through the introduction of a new fare structure on domestic routes in its South American domestic markets. This move is to ensure that it remains competitive as existing and potential new low cost airlines aim to establish a foothold in the region.

The company's plans emerged just as Copa Airlines decided to transition its Colombian operations to a low cost model - Wingo - and the Viva Group set its sights on launching its third Latin American low cost airline in Peru during early 2017. Airlines within LATAM have leading positions within those countries. Over the long term LATAM expects rapid leisure passenger growth in Latin America, and is establishing a framework to compete for those customers.

Key to LATAM's execution of its new fare structure is cost efficiency, and the airline has cited several ways to achieve lower costs - including the expansion of direct sales, improved productivity and a marked increase in aircraft utilisation - in order to attain unit costs to compete with new low cost competitors.