CAPA Latin America Aviation & LCCs Summit

Curacao, Curacao
16-17 Sep 2019

In this up close and personal chat with Azul Chief Revenue Officer Abhi Shah we take a closer look at the successes and failures of the region’s largest LCC.

In this important session, we bring together key airports in the region to share notes on what they are doing to develop and grow their route network.

  • What is best practice? 
  • What lessons have been learned from previous failings?
  • What are airlines looking for from local airports?
  • How can airports target carriers?

Dennis Cary, SVP, Commercial & Planning, Copa Airlines

John Thomas, Senior Advisor, CAPA – Centre for Aviation

Travelport’s Senior Director of Air Commerce Carlos Quijano talks about major milestones in the implementation for NDC in 2020.

The head of airline business as Sao Paulo Guarulhos International Airport Joao Pita outlines passenger growth for 2019, as well as offering insight into how airlines have quickly filled the void created by Avianca Brasil’s exit. Mr Pita also highlights how the airport is improving the customer experience. 

Copa Airlines’ SVP of Commercial and Planning Dennis Cary concludes that overall, the company’s markets in Brazil and Mexico are performing solidly, while its proposed joint venture with United and Avianca should not face resistance from regulators, and secure necessary approvals.

Caravelo’s CCO Jonathan Newman offers the latest developments in chatbot and mobile technology as well as the approach of Mexican ULCC Volaris to adopting a subscription model. 

Bluebox Aviation Systems CEO Kevin Clark discusses the proliferation of the company’s portable IFE systems, offers insight into opportunities in Latin America and highlights some interesting developments in the application space for IFE. 

Peggy Croes, Director of Marketing, Air Service & Tourism Development for Curacao Airport Partners outlines new destinations in the US that Curacao is targeting, and how the island differentiates itself as interest by airlines in serving the Caribbean continues to grow.

Azul’s chief revenue officer Abhi Shah provides an update on the airline’s new shuttle service between Rio to Sao Paulo in the early weeks of service, talks about market dynamics between the US and Brazil and discusses how market share is not a major focus for the airline.

Alfredo Gonzales, American Airlines’ Managing Director of the Caribbean, discusses the airline’s thoughts about its new Boston-Nassau route after Hurricane Dorian’s strike on the Bahamas, demand to the Dominican Republic in light of recent negative press and the airline’s prospects on Caribbean routes for the winter season.

Curacao’s Prime Minster provides a snapshot of the island’s tourism outlook noting the country is seeing growth in the US, but also from Latin American destinations including Colombia, Brazil, Chile and Peru. 

IATA’s Regional VP of the Americas Peter Cerda highlights various governments that are making strides in realising the value of of aviation while concluding 2020 is a transition year as several countries in the region are holding elections, including Argentina. 

Travelsky’s Director of Marketing and Sales for Quick PRS Lars Gaebler talks offers insight into how larger and smaller and regional airlines can approach their retailing strategies, and offers a more piecemeal strategy to adopting perosnalisation. 

Winair’s CEO Michael Cleaver discusses the airline’s approach to augmenting its fleet, how it views opportunities created by InselAir’s market exit and the company’s continued profitability in 2020.

ALTA’s Executive Director Luis Felipe de Oliveira talks about major focus ares for the association heading into next year, the passenger growth outlook for Latin America, and the necessity for Mexico’s government to define Mexico City’s airport structure now that plans for a new airport have been cancelled. 

Air Antilles CEO Serge Tsygalnitzsky offers insight into the company’s priorities for 2020, the importance of the proposed Caribsky alliance and an update on the airline’s plans to replace older Twin Otters with newer aircraft of the same type.

Historically, connectivity within the Caribbean has been limited with traffic forced into hubs like Puerto Rico and now Miami. Is there an opportunity for the point-to-point LCC model to start connecting the different destinations within the Caribbean?

  • How can LCCs create profitable and sustainable route network?
  • What cooperation between regional airlines can assist with this growth?
  • How can LCCs overcome traffic rights within the region?
  • What are the main source markets for Latin America inbound tourism?
  • What are the key source markets for international growth?
  • Is the region well positioned to attract key inbound markets?
  • How can these regions target further growth?
  • Tapping into high growth countries of origin
  • Growth from traditional sources
  • Adequacy of non-aviation infrastructure
  • What does government/industry need to be doing to drive growth 

Brazil posed significant challenges for Latin American operators during 2018 because of currency fluctuations and uncertainty driven by the presidential elections. The pressure was largely in international markets – particularly to the US and Europe. LATAM Airlines Group recently said that there had been some rationalisation of capacity between Brazil and the US, but capacity from Brazil to Western Europe remains high. 

Forecasts indicated seats from Brazil to Western Europe would be markedly higher in 2019, and some of that was driven by LATAM’s introduction of flights from Brazil to Rome, Lisbon and Tel Aviv in 2018, and Munich in 2019.  

LATAM appears to be closing in on finalising JVs that it tabled with its fellow oneworld partners American and IAG in 2016. Chile’s antitrust tribunal has approved the arrangements but the country’s Supreme Court is hearing appeals to the decision. Even as those appeals move forward, LATAM appears to have a level of confidence that it can progress with its proposed immunised tie-ups.  

GOL, LATAM and Azul all seem to have a reasonably positive view of Brazil’s domestic market. As 2018 came to a close, LATAM characterised domestic demand as healthy. Most of the country’s largest airlines have managed their capacity rationally and seats in the domestic market, while up slightly in 2018, remain below levels reached in 2012 and 2015.

Latin American Airlines continue to face a level of uncertainty as new governments in the region’s two largest markets settle in and navigate trade disputes, geopolitical issues and a potential global economic slowdown.

Currency devaluation in Brazil and Argentina combined with volatile oil prices are forcing Latin American operators to take a cautious approach to 2019, but domestic demand in these two markets appears to be stable as customers opt for domestic instead of international travel.

The growth of Latin American ULCCs and low cost airlines continues unabated as new start-ups in Chile and Argentina work to grow their respective market shares domestically; however, yields in those markets are likely to remain under pressure well into 2019.

What is the outlook for the next five years?

  • What historical drivers have impacted aviation previously?
  • What is the likely of future growth?
  • Update on fleet orders and deferrals.
  • What is the outlook for important routes such as Latin America to Europe and Latin America to the US?

By virtue of its very nature the airline industry is highly dependent on partnerships of one kind or another. In times of stress, reliance on these partners – and enhancing shared goals – becomes a high priority, especially for low cost carriers. These partners range from all parts of the supply chain, notably airports, to fellow airlines, GDS organisations, agencies, payment providers and many more.

  • Have you got the right partnerships?
  • Who you do business with can be a key determinant of success or failure.
  • Undergoing a transformation can put pressure on business partners, suppliers and other stakeholders.
  • How can LCCs stop operating in isolation?
  • What value can partnering with organisations outside of aviation, such as OTAs and Hotels, improve the bottom line?

The growth of Latin American ULCCs and low cost airlines continues unabated as new start-ups in Chile and Argentina work to grow their respective market shares domestically; however, yields in those markets are likely to remain under pressure.

It seems that some of Latin America’s largest operators are working to brace themselves against that uncertainty even as the ambitions of the region’s aspiring LCCs/ULCCs remains as robust as ever.

  • Can the Latin American market handle an influx of aspiring LCCs?
  • How are the full service carriers reacting to this influx?