ALTA still upbeat on Latin America despite slowdown

Washington DC
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The Latin American and Caribbean Air Transport Association (ALTA) remains positive about prospects in its region, despite recent indicators that slower than expected economic growth could hamper developments at the region's airlines.

Referring to growth in the continent as "like a roller coaster", ALTA executive director Alex de Gunten points to Brazil as an example, saying that it was obvious that growth in the South American country was "not sustainable".

"But having said that, if you look at the basics, the economic growth drivers are there [in Latin America]," says de Gunten. These include growing populations, increasing affluence and continued development.

"There will be ups and downs," he adds.

Latin American airlines have in recent months tried to rein in domestic capacity as they face slower traffic growth. Overcapacity in the Brazilian domestic market, for instance, has been a concern in the recent year.

One of the biggest carriers in the region, LATAM Airlines Group, revised downwards its capacity guidance for 2013 as it announced plans in August that it would take delivery of 22 fewer aircraft from 2013 to 2015 due to weaker macroeconomic conditions.

Brazilian domestic carrier Azul also announced recently that it would scrap a planned initial public offering, citing unfavourable market conditions.

ALTA's de Gunten, however remains optimistic about traffic growth in the region, pointing out that the estimated traffic growth in the region of 6.9% in the next 20 years as outlined in Boeing's latest market outlook.

The region has prepared for this expected growth by investing $60 billion in new aircraft, says de Gunten.