When Will The Latin American Airline Market Recover?
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What is your timeline for the Latin American airline market to recover?
Aviation Week Air Transport and Safety Editor Sean Broderick answers:
Latin America, much like other regions that depend on significant international flying, is being hit particularly hard by the pandemic and its related restrictions. The International Air Transport Association’s (IATA) latest figures show year-to-date revenue passenger kilometers down 76% in the region through October—a bigger drop than the Asia-Pacific region, Europe, North America and the market as a whole. If there’s a silver lining: the region’s load factor was 70%—the highest of any region. This suggests capacity discipline and also is evidence of little government support propping up unnecessary flying.
Some carriers are beginning to see demand upticks. Gol, riding a general recovery in Brazil, plans to have its full pre-COVID-19 domestic network back in place by January. Azul plans to operate 70% of its 2019 capacity during the current quarter. Volaris, the most bullish of the bunch, says it could reach 2019 passenger figures in the first half of 2021.
Others are less optimistic. Take Copa—one of the carriers grounded by travel restrictions. Having resumed flying in August, it plans to be at 40% of 2019 capacity in December.
Overall, recovery is expected to take some time. “Our updated estimates imply a slow recovery in demand, with 2021 domestic demand representing 85% of 2019 levels, while international only 60%,” J.P. Morgan analyst Fernando Abdalla wrote in a recent research note.
Development and distribution of highly effective vaccines may help accelerate this, but right now it’s too early to tell.