International airline capacity from Latin America to the rest of the world is still concentrated in two regions: North America and Europe which, between them, account for 98% of the nonstop capacity.
While capacity to other regions is growing faster, the two mature markets' growth, at around 4%/year over the past 10 years, keeps them well ahead. The last year’s worth of growth in those two regions is actually about half the size of the total traffic to all other parts of the world.
To both regions, the growth has been driven by a combination of factors. In North America, the number of destinations had been increasing – at least until 2016. In 2017, we are seeing a drop to 88 from 94, taking it back to 2013 levels. This is somewhat surprising as the Latin economies are improving, but may be driven more by politics.
The number of routes from Latin America has also increased significantly, although here, too, there has been a small drop in 2017. Secondly, the average number of seats per departure has increased, from 125 in 2006 to 148 in 2017. Finally, the frequency per route (for all airlines combined) has increased.
The average is now more than one flight per day, while in 2011 (because of an increase in routes, but a static number of flights) the average was just under one flight per day.
MOVES TO CONSOLIDATE
There are now 424 routes (up from 338 in 2006) where there is at least a year-round daily service by an airline. Clearly there has been some consolidation both in Latin America, where the two major ALTA member airlines - LATAM Airlines and Avianca - now control airlines in several countries, and in North America, where there have been several mergers among the top-tier carriers.
On European international capacity, the number of destinations has also increased – and has continued increasing in 2017 to reach 54. The number of routes has gone up equally, and faster than to North America, but the number of frequencies per route has been stable and is only half that of North America – clearly the distances are much longer, and the market sizes are smaller, so there are only some 60 routes that require at least a daily widebody.
The exclusive use of widebodies on the European routes means of course that the average number of seats is much higher – at 304 in 2017 – and this, too, has increased since 2006, when it was 275. This is in spite of the Boeing 787-8 now being the second most frequently operated aircraft across the South Atlantic, taking over from A340s and 747-400s, as the larger Boeing 777 has also become increasingly popular on these routes.
The number of airlines operating has fluctuated between 42 and 53 over the past 10 years and is now at the lower end of this range. However, with long-haul low-cost airlines such as Level and Norwegian about to start operations between Europe and Latin America, this is set to increase.
The remaining regions are very small, but there are some interesting developments. In recent years African carriers Royal Air Maroc and Ethiopian Airlines have opened routes to Brazil, and Ethiopian has announced that it will extend its Sao Paulo route to Buenos Aires. This is a route structure that other airlines such as Qatar Airways and Emirates are following too and all use Latin America's biggest aviation market as their entry point.
From the Asian side, All Nippon Airways is a new entrant into Latin America, operating a Tokyo-Mexico City flight, and Aeromexico has continued its expansion to Asia with new flights to Seoul. On the southern Pacific, LATAM Airlines has opened a non-stop flight to Melbourne, while Air New Zealand has started to fly to Buenos Aires. On these very long, thin routes, the markets are still too small, and the aircraft costs are too high to operate more than a handful of routes, so most traffic will still have to connect.
Source: Flight Daily News