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LATAM studies a low cost operation to meet market conditions

Latin America’s largest operator, LATAM Airlines Group, is neither confirming nor denying its intent to launch a stand-alone low cost airline; but the company is seeking an operational licence in case the creations of a dedicated low cost operation is necessary to compete more effectively with upstart and aspiring low cost and ultra low cost airlines in the region.

During the last couple of years, LATAM has launched a tiered fare structure to compete more effectively with low cost airlines as discounters continue to grow their respective passenger shares in most of LATAM’s domestic markets in Latin America.

Most of LATAM’s full service airline counterparts in the Americas, particularly the US, have opted to stick to fare segmentation as their preferred defence against ULCC growth. But the US is a much more mature market, and differing market dynamics in Latin America may warrant an alternative approach.

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