LCCs in Central America aviation: 8% penetration rate means enormous upside. Volaris leading the way

Low cost airlines are finally starting to penetrate the intra-Central America market, driven primarily by the launch of the region's first local LCC. Mexico's Volaris launched a subsidiary in Costa Rica at the end of 2016 and the new airline has so far launched five routes - all of which are international routes within Central America that were not previously served by LCCs.

Travel within Central America, which has a population of 45 million, has always been inhibited by high fares and a lack of competition. For the first time, six of the main city pairs within Central America how have an LCC option, with five served by Volaris and one by Copa's new LCC brand Wingo.

Central America should continue to experience a surge in new LCC flights as it is one of the world's most underpenetrated markets. However, high taxes and airport costs remain a major impediment to growth.