Latin American airlines new aggressive Strategy to compete in the international Arena.
Recently, I commented on the amazing progress commercial aviation has made in Latin America, particularly over the past twenty years. According to the World Tourism Organization and the Airbus Global Market Forecast (GMF), air travel growth rates for Latin America far surpass projections for the rest of the globe. In this article I will share two of the winning strategies developed by the region’s largest airlines to successfully compete in the international arena.
In the early 1990s, three important companies (LAN, TACA and TAM) joined forces to purchase 90 Airbus aircraft – perhaps one of the greatest achievements in the region’s recent history. This collective effort, has allowed these companies to offer fares at more competitive prices. Since then, Latin-America’s commercial airlines have opted for large aircraft purchases, substantial restructuring and strategic mergers, working together to capture market shares from their foreign competitors, especially in long-haul market. These actions have allowed the region to triple the size of its fleet over the past two decades. In fact, three of the most important merged companies (Latam, Avianca and Copa) operate a combined fleet of 600 aircraft and fly to 317 domestic and international destinations.
The other important move consists in strengthening ties with North America’s and Europe’s largest airlines to enter more competitive markets. To this end, Avianca is brokering an alliance with Delta Airlines and United Continental to narrow the gap with American Airlines. Aeromexico has also brokered a 1.5 billion dollar cooperation agreement with Delta Airlines. Furthermore, LAN (based in Chile) and TAM (based in Brazil) successfully merged and became the region’s largest airline in 2015. There is no doubt, Latin-America’s airlines aim to expanding and they are making bold moves to achieve their goals.
South American Jets