LATAM Airlines Group has no plans to launch a separate low-cost carrier, with chief executive Enrique Cueto saying that such a move will be “impossible” due to the group’s size.
“We are not just one airline,” says Cueto of LATAM’s seven affiliates in South America. “To create a new low-cost carrier, we will end up with 14 airlines.”
But LATAM is taking actions to cater to the growing price-sensitive leisure passenger segment, and will debut a new fare structure on domestic flights in six countries from 2017. It will offer basic economy fares – sans food and beverage, and checked bags – as part of the new structure.
Cueto says the new fares will enable the airline to stimulate air travel in Latin America, which is still low compared to other parts of the world. “We are going to grow, and which is the main segment that’s going to grow? It’s the lowest fare-seeking passengers.”
LATAM’s new fare structure comes as the region prepares to welcome a wave of new low-cost carriers. Panama’s Copa Airlines is debuting a low-cost affiliate, Wingo, in December. Viva Air Peru will begin service in 2017, and Flybondi plans to take to the skies in Argentina the same year.
Cueto acknowledges that even with an unbundled fare structure, LATAM will still have a cost disadvantage compared to pure LCCs.
“But in the end, the passengers get better fares and we get an advantage in revenue,” says Cueto, adding that any revenue growth will allow LATAM to invest in its product for business travellers, and build up defenses in case the region’s low-cost carriers expand dramatically in the future.
For coverage of the ALTA Airline Leaders Forum taking place in Mexico City on 13-15 November, visit www.flightglobal.com/alta