LATAM Airlines Group Update – Corporate Market Is Key, But Leisure Is Growing Considerably Faster
LATAM Airlines Group SVP global sales Nicolás Goldstein highlights the airline’s activity in the South Pacific region and reveals aspirations to grow its Santiago – Melbourne service to a daily schedule. He highlights how passengers out of Australia are flying beyond Santiago across all of South America, how LATAM is working to expand its global network (although Asia is not on its short-term radar) and why corporate demand and its strong correlation to GDP could see a stronger focus on the faster rising leisure market.
Transcript
Nicolás GoldsteinFor LATAM it's a very important market. We've been growing during the last few years. Last year we opened a new route to Melbourne. We are flying from Sydney to Santiago via Oakland seven times a week, from Melbourne to Santiago in a direct flight three times a week. Plus we have also the Tahiti flight from Tahiti to Santiago via Eastern Island. So we've been growing. We believe that looking forward we're going to continue growing. The market from Melbourne grow 40% in the last year, and it's not only in South America, people from South America coming to South Pacific, but it's also from South Pacific visiting South America.
So we are growing. Even the load factors are really, really nice. And we wish we continue increasing the offer, first of all, to Melbourne going to, I hope, a daily flight some day. So we have a very great experience down here.
We see many Australians going to South America, but as you can imagine, South America is not only one destination. So we have the biggest network in South America. So people are getting into South America via Santiago, but then they're going to Brazil, Argentina, Ecuador, Peru. We have very nice places to visit like Cuzco, Rio De Janeiro, Buenos Aires, so people probably leisure travel once in a life and they want to visit different places. Now we have like this tourist type of routes. For example, you can go from Santiago to Cuzco in a direct flight that we opened this year. So we are having like a circuit, like a tourist circuit, in order to serve new people going to South America and trying to live the South American experience probably once a life.
Last year we opened 20 new routes. This year we opened like 30 new routes. And last year we focus in increasing the network within Latin America. This year we started increasing more flights to Europe, to North America. So if you asking which flight do we need? We fly 240 places, you know, in 25 countries. I don't have in my mind like new places that we should go there. Probably someday I know that if I don't tell you, you are going to ask me Brazil/Australia, is going to be our big flight.
I believe there are opportunities, but we are going step by step. We are trying to serve the most obvious destinations, the ones that we believe we can keep a flight. Start with probably three frequencies a week and then reach the seven frequencies a week, because operational is very ... Savings is better having like a seven days flight. So I don't see in the short term a going to other Asian markets now.
We've been the first American airline with a 787 with Dreamliners. We were launching customers, so we are really on top of the edge with the new aircraft. We also have Airbus 350 based in Brazil. We have the 787 based in Santiago, Chile. And the 350s based in Brazil. So we have the newest and the best airplanes in the region. So we are not missing any new airplane right now.
As you can imagine, corporate market is probably the most important market. The only problem we have with the corporate market is that it's growing with the GDP. And we also have our other segments growing with the elasticity of the demand, where in Latin America we see that if we drop prices, the demand increase. We believe that in our domestic markets the demand will increase 50% by the year 2020. So we are very focused on the corporate market, but this is a market that is going to grow one digit. In the leisure market we believe that we're going to grow in two digits. So at the end of the day, we have a brand that is only one kind of legacy airline that is serving domestic, regional, and long haul flights, and we are trying to keep both [inaudible 00:05:10] in the three types of trips, duration of the trip.
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