US-to-Latin America aviation: JVs and LCCs change the dynamics


US airlines are dominant on markets between the USA and Latin America, and in many ways that dominance will remain intact as the large US airlines work to solidify immunised joint ventures between the two regions. 

Hubs in both those regions will continue to play key roles in North-South traffic flows as those JVs evolve, with Sao Paulo, Bogotá, Panama City, Lima and Santiago continuing to bolster their connectivity between the two regions. 

Low cost airlines based in the US and Latin America will continue their expansion as new aircraft models with the capability of operating on longer routes and benefitting from improved cost performance create opportunities for expansion into markets previously not viable. However, it appears that expansion will occur at a measured pace as most operators in the region are using new generation narrowbodies to drive cost efficiency. 


  • The stature of hubs on routes from North to South and Central America should continue to grow as immunised JVs take shape in the market.
  • Low cost airlines also continue to grow in the market, but for now those airlines are using their new generation aircraft to drive efficiency rather than opening up longer, thinner routes. 

JVs will become the backbone of full service airline strategies in Latin America

A snapshot of data from CAPA and OAG shows US airlines do dominate share between the country and upper and lower South America and Central America.

But low cost operators arguably hold solid shares, given their respective smaller scales compared with American, Delta and United. American’s fleet of 959 aircraft in service is more than twice the size of the combined service fleets of Spirit and JetBlue

Top five airlines by seat share from the US to Latin American regions, with LCC share, as of early Feb-2019

Region Top airline seat share Low cost carrier share
US to upper South America 

American 25%

LATAM Airlines Group 19%

Avianca 14%

United 9%

Delta 9%

Spirit 5%

JetBlue 5%

Azul 4%

GOL 3% 

US to lower South America 

American 39%

LATAM Airlines Group 26%

Aerolineas Argentinas 14%

United 13%

Delta 8%

US to Central America 

American 18%

United 18%

Delta 13%

Volaris 8%

Southwest 6% 

Alaska 4%

Spirit 4%

JetBlue 3%

Frontier 2% 

For the large full service US airlines JVs will be the backbone of their respective strategies for Latin America. American is aiming to forge a JV with the LATAM Airlines Group, and Star Alliance partners Copa, Avianca Holdings and United have also agreed to form an immunised tie-up on routes between Latin America and the US

Delta and Aeromexico already operate under an immunised transborder JV, and during the first year of that deepened partnership Aeromexico launched service to Delta’s hubs in Atlanta, Seattle and Portland; even as Aeromexico plans to drop service in several US transborder markets due to overcapacity in the market, the service to Delta’s hubs remains intact. 

During 4Q2018 Delta Air Lines stated that unit revenues on its Mexican routes had increased 3% year-on-year, and has cited some certainty materialising in transborder business markets.

American has said that demand is improving Mexico-US markets, but pricing remains weak. Perhaps the ability of Aeromexico to plan their routes and pricing jointly between the US and Mexico is helping to drive improving results in those markets. 

Hubs will continue to rise in prominence; implications for Mexico City 

As the planned JVs by American and LATAM and United, Avianca and Copa move forward the importance of hubs will grow, especially Latin American hubs in Peru, Bogotá, São Paulo, Panama City and Santiago.

Once JVs are in place, the member airlines will work to maximise connectivity at beyond points in both Latin America and the US. But infrastructure improvements are necessary at many of those hubs – particularly Lima and Bogotá. 

Mexico City Juarez International airport is already operating well beyond its limits, with passenger levels approximately 13 million higher than the facility’s 32 million threshold. Plans for a new airport already under construction have been axed, and the alternatives offered by new government fall short of meeting Mexico City’s potential to become a powerful connecting hub. 

It remains to be seen how those changing tides will affect the joint strategy of Aeromexico and Delta. During 2017 Aeromexico executives said that Mexico City’s geographical position created a significant opportunity for transporting customers from Central and South America to the US west coast, “and we will concentrate on those flows”. But with the dissolution of the new airport, it could be tough to meet those ambitions. 

See related report: Mexico City: no new airport – no real alternative 

Latin low cost operators are using new narrowbodies to drive efficiency 

Low cost operators and ULCCs also have ambition in Latin America as they work to stimulate traffic within, and to and from, the region. 

The ULCC Volaris has a robust presence in the US, serving 23 destinations. The airline largely targets visiting friends and relatives (VFR) markets and has determined that segment is more dependent on US economic performance, which has been strong throughout most of the past year. 

Its Costa Rican subsidiary also operates flights from San Jose with one stop in San Salvador to Washington Dulles and New York JFK, and to Los Angeles from Guatemala City and San Salvador and New York JFK. 

Brazil’s largest domestic airline, GOL, has launched service to Miami and Orlando International from Fortaleza and Brasília with its new 737 MAX 8 narrowbodies. The next generation MAX and Airbus A320neo family narrowbodies offer flight ranges for opening new, thinner routes between North America and Latin America that were not plausible with older generation aircraft. 

GOL is particularly bullish on the capabilities of the 737 MAX, noting that the aircraft’s fuel burn is amazing, and the type will serve as a pillar of its international expansion into the US and Latin America

Copa also operates 737 MAX jets, and has a mix of the -8,-9 and -10 variants on order. The airline is using the jets to drive down its unit costs, and in some cases, to upgauge. The airline has not really talked about new routes for the aircraft, even though its MAX jets could open opportunities for the US Pacific Northwest and Western Canada. For now, it seems Copa is using its new generation aircraft to drive cost efficiency and upgauge on routes that warrant more capacity. 

According to CAPA’s fleet database, as of early Feb-2019 Azul was the largest operator of A320neos, with 23 in its fleet. Initially, the aircraft replaced Embraer 195s that were moving into higher frequency business markets. But Azul also operates the new generation narrowbodies on service to the US from Belém to Fort Lauderdale

The 174-seat A320neos are replacing 118-seat Embraer 195s and have similar trip costs to the smaller jets, as well as a 29% lower seat cost, according to Azul. “When one arrives, we stick it where it is needed, and we have many needs for this aircraft”, company Chairman David Neeleman has concluded. 

CAPA’s fleet database shows operators in Latin America were operating 14 A321neos as of early Feb-2019 – Interjet eight, Volaris four and two for Avianca. Latin American Airlines have a total of 93 of the aircraft on order. 

Latin Airlines with Airbus A321neos on order as of early Feb-2019

Airline A321neos on order
Avianca  15
Azul 10
LATAM Airlines Group 18
Volaris  36 

No Latin American airlines have opted for the A321neoLR, which could open even longer, thinner routes been North America and South America. Only two of the aircraft are in service; airlines in the region may not yet feel they need the 4,000nm range of the aircraft. Most of Latin America’s large operators have deferred aircraft deliveries as large economies in the region continue to recover. 

The North America to Latin America market is undergoing a period of change 

The North American to Latin American market is in a period of evolution as larger full service airlines work to forge JVs with their Latin partners to create powerful entities to leverage growing traffic between the two regions. 

Low cost airlines will also continue to expand on North-South routes, but that growth could take some time to materialise as those operators work to mature their networks and study opportunities available in longer haul markets. 

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