Podcast: Strong Demand And Shifting Structures In Latin America

As industry leaders prepare to gather in Rio de Janeiro for Routes Americas 2026, Latin America is experiencing renewed traffic growth alongside structural change. Aviation Week editors discuss Brazil’s competitive reset, Argentina’s liberalization, Venezuela’s reopening and the potential Viva-Volaris merger reshaping Mexico.

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David Casey: Hello and welcome to Window Seat, Aviation Week's air transport podcast. I'm your host, David Casey, editor-in-chief of Routes. Welcome aboard. We're recording this episode ahead of Routes Americas 2026 taking place from the 3rd to 5th of March in Rio de Janeiro, where airlines, airports and tourism authorities from across the region will gather to discuss new air services, network strategy, and future growth opportunities. With the event being hosted in Brazil, this week we're taking a closer look at why Latin America remains one of the most dynamic, complex and closely watched aviation markets in the world. According to airline association ALTA, air traffic across Latin America and the Caribbean grew 3.8% in 2025 to 477 million passengers. Argentina recorded one of the highest percentage growths, and Brazil passed 100 million domestic passengers for the first time. And yet, despite the momentum, volatility remains a defining feature: political shifts, currency swings, infrastructure gaps, and geopolitical shocks.

So, to discuss some of the key themes that are affecting the region at the moment, I'm delighted to be joined by my colleagues, Lori Ranson, CAPA senior analyst Americas and ATW and Routes senior editor, Aaron Karp. Lori, Aaron, great to have you both here.

Lori, let me start off with you. For the past several years, Latin America has often been described as one to watch, and I think that's partly because of the recovery that we've seen, but also the long-term growth potential. When you look at the region in 2026, what are some of those dominant themes emerging right now? Is it growth? Is it consolidation, liberalization, recalibration, or is it something else entirely?

Lori Ranson: I think it's a story of rationalization and growth. If you think about it, five airlines in the region have reorganized in Chapter 11 during the last six years, and that's contributed to a much more stable environment and also improved their balance sheets. And even though IATA is forecasting a drop in the region's margin this year from 3.8% to 5.2%, LATAM and Copa are arguably forecasting some of the best operating margins worldwide of 15% to 17% and 23% to 24%. I also think there's been capacity rationalization in the region. Just to briefly touch on some of the larger markets, looking at Colombia's domestic market, airlines have rebalanced their supply after growing a little bit irrationally in the market over the last couple years. Mexico's domestic market is in stable shape, as is Brazil's. And I think given the recent adoption of more liberal policies in Argentina, which I know we're going to talk about, a lot of carriers have added international capacity to the country. So there's a little oversupply there, but it's not totally irrational.

David Casey: So I think what you described in there, it's not a boom cycle, it's more of a measured phase of growth, and I think the airlines that have restructured, as you said, have been more cautious maybe, being changed their decision making in terms of how they deploy their fleet and their network and the capital discipline as well. Aaron, what are you seeing when you look at this region? I think one thing from a development angle at the minute is how global airlines are adjusting their networks in response to tariffs and geopolitics, and there seems to be a lot of attention on Latin America and the Caribbean, particularly from countries like Canada and parts of Europe as well. So what are the key themes that you are seeing with regard to networks?

Aaron Karp: I've been covering the Latin American aviation market for 25 years, and I believe this is the most stable it has been in that time, and there seem to be stronger airlines with better balance sheets, with more reach. And I think we're starting to see real evidence that what we've talked about for years and years about the middle class being able to afford flying instead of taking buses is really coming to fruition. One thing you hear from Latin American airline executives is that not just the people can afford to fly, but more and more can afford the premium products and are joining loyalty programs. And that's a big deal I think, because that shows that the middle class is really growing in a way that benefits the airline industry. You talked about some markets that have focused on Latin America. I think one that's very interesting is Canada. Of course, there's been a lot of political tension between the United States and Canada, and Canadians have shown a real reluctance to fly to the United States.

And so you hear the Canadian carriers saying they're shifting leisure demand in particular to the Caribbean, Mexico, and Latin America. Just as one statistic, Air Canada said in July that for this winter, their capacity would be up 16% year over year in Latin America, and they've started new routes including resuming service to Quito, Ecuador, which they had suspended in March 2020. Transat CEO Annick Guérard said recently that the Latin American market really remains solid and it's driven by this continued shift away from US leisure markets. I think one thing we should note is that Porter, which is a Toronto-based airline, which also has pushed into Latin America, is also still expanding in the US. They just announced that they're going to fly from Toronto Pearson to Austin and that they're going to expand their service from Billy Bishop Toronto City Airport to Chicago O'Hare Airport, and earlier this month they started Vancouver to Phoenix. I think you see Canadian airlines feel that the political situation now is not going to last forever and that they want to keep a foothold in the US market, but more and more they're shifting towards Latin America.

David Casey: Absolutely. It's interesting you mentioned that about Air Canada and Transat—two carriers that have actually expanded in Brazil recently and both opened new routes to Rio de Janeiro, which of course is where we're heading next week for Routes Americas. So I think that brings us on to talk about the Brazil market. We've seen the three main carriers in Brazil undergoing mass restructuring: LATAM and GOL during the pandemic, and recently Azul has only just exited Chapter 11 bankruptcy protection, but I think all three of those carriers are looking at 2026 and the years ahead with renewed ambition, seeing LATAM Brazil expanding domestically internationally. It recently placed an order for, I think it's 24 [Embraer] E2s; GOL potentially launching widebody operations later this year. And then as I just said, Azul has emerged from Chapter 11 with a stronger balance sheet. Aaron, how do you see that market evolving? I know you've just written a feature for Air Transport World magazine on Brazil. Is there still a lot of room to grow? I think Brazilians average just, what is it, one airline trip every two years, so it is quite a low number of flights per capita. How do you see the market evolving?

Aaron Karp: In that feature, one of the things I mentioned was what you mentioned with the 0.5 per capita airline trips, which really affects the domestic market, but also I mentioned that historically they get around 5-6 million visitors a year. This year the new numbers just came out and they had 9 million visitors to Brazil this year, which completely blew away any record by well over 2 million. And as you said earlier, the 100 million passengers now flow domestically in Brazil. So I think you're starting to see perhaps what we've always talked about, the potential that Brazilian market's starting to really show that the potential is starting to be realized. And you mentioned that the Chapter 11 reorganizations: Azul exited just this month and they received $850 million in new equity. They cut their debt and lease obligations by $2.5 billion. Both American Airlines and United committed to investing $100 million into Azul, which I think shows the global market's interest in Brazil and believe that it's a really important market.

And I think one thing that we've heard LATAM say is that they're seeing growing premium travelers in Brazil, which I mentioned earlier. And so that indicates that not only do you have a growing middle class flying coach, but you now see a growing number of people that are able to fly premium. And Gol is part of Abra Group now, which is tied to Colombia's Avianca. So between Gol and Avianca, they really have a north-south reach. LATAM has a big presence in Brazil and a wide range to get all over South America and then there's Azul. So I think you have three airlines that are really positioned to compete and it'll be really interesting to see if there's room in the market for all three of them and how they compete. I think all three have expressed a lot of confidence recently and as always, Brazil has so much potential and I really think in the last year or so we're starting to see that potential begin to be realized.

David Casey: And in terms of that confidence, recently saw LATAM, as I said earlier, order the 24 E-195 E2s, so they can better right-size capacity on some of those thinner domestic markets. Lori, I know you covered this story. How do you see the competitive dynamics among the three largest carriers in Brazil evolving over the next three years?

Lori Ranson: So I think that order by LATAM shows its ambition and its confidence in the Brazilian market. And I also think it's a way for LATAM to preserve its leading position in the domestic market. LATAM has no doubt studied what Azul has done for years in Brazil's market with its operation of E2s. And now that Azul has exited Chapter 11 with a much lower growth profile, they've really slashed their growth projections, it's an opportunity for LATAM to expand. And maybe just to plug Aaron's piece one more time, LATAM's loyalty program is growing and so obviously this expansion, any expansion opens up that pipeline for more premium revenues. And as is the case with US and Canadian carriers, LATAM's premium revenues are outpacing main cabin revenues. It's a way to expand their market presence and also just funnel more passengers into that ever-growing and ever important loyalty program.

David Casey: One of the big things that we saw last year in the Brazilian market was obviously the collapse of the potential merger between GOL and Azul. Obviously ABRA was looking to bring Azul within the group. That's effectively off the table now. Aaron, I wonder what your thoughts are on consolidation within the Brazilian market. Do you think that we'll see any in the near term or is that something that probably is unlikely to happen now as Azul has restructured and exited Chapter 11?

Aaron Karp: Well, I wouldn't rule it out, but I think right now it seems like Azul is very interested in competing on their own and seeing how they can do, and ABRA—obviously the merger talks didn't work out and so it seems like they've moved on from that. And so I think we now have three pretty confident competitors, Azul, LATAM and GOL, especially now that it's tied to Avianca with the ABRA group. And I think it'll just be interesting to see how this plays out over the next couple of years. And I think all three airlines want to see how it'll play out over the next three years—and two years down the line, three years down the line, if Azul is struggling to operate on their own, then perhaps merger talks ramp up again. But GOL has consolidated with Avianca. LATAM has just unbelievable reach all over South America and internationally. So I think those two carriers, now that the bankruptcies are over, I don't see consolidation in the near future and I think everyone including the airlines is really interested to see how the Azul-GOL-LATAM battle plays out over the next couple of years.

David Casey: Certainly it's going to be interesting to see what happens in the Brazilian market. Let's turn our attention now to Argentina, which has been a real success story in recent years. Traffic in 2025 reached 33.3 million passengers. That was up 33% and international growth was even stronger at more than 18%. Now, liberalization has opened the door to new entrants and expanded connectivity. I think historically Argentina is one of those countries that seems to swing between openness and protectionism depending on what political cycle we're in. I know there's already some concerns about overcapacity and pricing as well. Lori, the growth that we've seen in Argentina in recent years, is that sustainable or is it more of a short-term surge that could prove fragile in the long run?

Lori Ranson: That's a really great pertinent question. Last year, [Javier] Milei's party did win the midterms, so the reforms that we've seen will at least last into 2027, and that's the next presidential election in the country. As you said, politics in Argentina can sometimes take pretty wild swings, so I think it's tough to predict what's going to happen beyond 2027, but I think until then you're going to see that growth sustained because Argentina is a really important market in the region. This time period where airlines have grown really shows what can happen when governments dig in and have a more liberalized attitude towards the sector. So yeah, I think there's a lot of potential there, but as I said, it's just tough to predict what's going to happen over the next couple of years. I do think it's worth pointing out, just in general, airlines today are much more adept at redeploying capacity if politics suddenly creates unfavorable conditions. And I think you just need to look at how quickly Canadian carriers pivoted to Latin America and the Caribbean away from the US to see that dynamic at play. So Argentina is a market to watch over the next couple of years, and as a side note, Argentine politics is something to watch over the next couple of years.

David Casey: I think that idea of airlines pivoting and moving to new markets neatly brings us onto the topic of Venezuela, where we've seen obviously a lot of political upheaval in recent months. We've had temporary airspace closures, but now we're seeing Venezuela reopening to international traffic, carriers returning and we're seeing US airlines exploring reentry, and now American Airlines has applied with the DOT to restart routes to Caracas; it’s has been absent since 2019 from the country. Aaron, are airlines viewing Venezuela as a genuine long-term structural opportunity or are they still approaching it more, do you think, as a tactical market where capacity is perhaps deployed a little bit opportunistically and then withdrawn if conditions deteriorate? What are your thoughts on Venezuela?

Aaron Karp: I think airlines are cautiously optimistic. When Nicolas Maduro was in charge, it was a very volatile market to operate into. As one example, the government of Venezuela suddenly said Copa could no longer fly from Brazil in July of 2024, and the US suspended all flights to Venezuela in 2019. And you just hear stories about it was a difficult market because the Maduro government was very volatile and made decisions impulsively. And while the new government, since he was arrested by the United States in a military operation, the new government is tied to, they've been close to Maduro, but they seem on aviation to have rapidly taken a different stance. American Airlines has applied to restart service there from Miami to Caracas and it looks like there's a good chance that's going to go through. Copa, as I said, they're strong in the market now. You mentioned back in November and December there was this military buildup by the United States in the Caribbean and all these NOTAMs about not flying there, and that caused some European carriers to pull back, but now it seems like they're going back in. So I think it is a market that's opening up. It has a good strategic location in terms of you're thinking about connections, and at least for now, those that have taken over the government there seem to feel like aviation's something that they're not going to be as strict on and they're not going to be as impulsive on. And so I think airlines are cautiously optimistic and it'll be really interesting to see how American does, I think, because there has been no service whatsoever between the US and Venezuela for seven years. And airlines like Copa could suddenly be told you can't fly here and then they're told you can fly here again. And it seems like that at least initially, we're only a few weeks into the new leadership of the government, and right now they seem to be very open to airline service from foreign countries.

David Casey: Yeah, absolutely. As you said, American is pushing to return to the country and it had quite a substantial presence there prior to 2019. And I think it's interesting as well that we're seeing Venezuelan carriers applying to the US to launch flights there. I know obviously there'll be work to do. They don't have a Category 1 safety rating, so it will take time. But I think it's a very interesting market to watch, the US-Venezuela corridor. Another market that is interesting for different reasons is Mexico. We have seen in recent days a lot of volatility, not tied to that. I want to discuss the Viva-Volaris potential merger. Both of those carriers are marking 20 years of operations this year, and I think a merger would combine roughly 250 Airbus narrowbodies and they would control a majority share of domestic frequencies within the country. It's a real big consolidation move within Mexico. Lori, I know you followed this closely. How transformative could this be for the country? Would it create a more rational pricing environment after years of intense LCC competition, or do you think the combined entity raises competition concerns? How do you see that shaping out?

Lori Ranson: Well, it will be transformative, and I think it's important to note that Mexico's president endorsed the deal early on, which is important given that scale that you mentioned because they control about 72%, combined 72% of Mexico's domestic seats. So the fact that she's endorsing it given that scale is encouraging. But I do think that some remedies are going to have to be imposed for the deal to be approved simply because that scale is enormous. With respect to pricing, it's really interesting because they've said that one of the aspects of combining is it'll give them better cost control, and it'll improve their costs. So you'd think, well, if we have lower costs, there'll be lower fares. But also given that scale, it does give them more pricing power in Mexico's market because they're not competing with each other on pricing. So I do think that pricing for those carriers will improve.

For now, it seems like it's a good sign that there's no real opposition either from the government or competitors. Aeromexico executives were recently asked about the merger, and they just pointed to, well, we'll see what the remedies are going to be. I mean, they weren't at least publicly, not opposed in any way to the tie-up. So, I think there's a pretty good chance that this will happen. And yes, it will transform Mexico's market and ideally create a more rational pricing environment, perhaps more rational capacity environment and the domestic capacity environment has been improving. So this might give it more momentum in that regard, but I've been following it and I'm really interested to see how this plays out. And I know a lot of people are watching it to see if it's going to be approved, how the Mexican government is going to approach it, but I think it's a positive development for the market.

David Casey: It's interesting to compare this to what's happening with LCCs in the US as well. We're seeing Spirit restructuring again under Chapter 11, Frontier is recalibrating. Aaron, do you think that Mexico is better positioned for consolidation success than the US or do you think there might be the same pressures surfacing again once growth moderates?

Aaron Karp: Well, I think in the domestic market, Lori wrote a piece recently where she was talking about how there are 0.5 trips per annum just like Brazil. But the story of Mexico has always been people moving from bus to aircraft. And if the low-cost carriers can put affordable fares out there then I think you could see more and more passengers doing that and grow the domestic market because Mexico is an international juggernaut. I mean, they have like 45 million visitors a year, which is I believe tops in Latin America. And it's the domestic market that has always slowed a little behind because of, again, what we always talk about in Latin America, people being able to afford to fly. I think they're well positioned in one sense because people moving from buses to LCCs really like what they see because they’re comparing it to a bus, whereas in the US you fly on Spirit and you're comparing it to Delta and you feel like it's bare bones.

And so I think in the US market, there's just that trouble where the mainline carriers started the basic economy product, and Spirit and Frontier have never been able to figure out how to differentiate. Now you see the two ULCC carriers, Allegiant and Sun Country, merging, and one of the things that attracted Allegiant was to get access to Mexico through Sun Country. They had wanted access to Mexico for a long time. So I think because of the growth potential, whereas in the US the growth may have been sort of maxed out, especially in the LCC sector, I do think Mexico has a better opportunity here for LCCs to operate and particularly because it is a great service. If you've ever been on a long bus ride between two cities in Mexico, you know what I mean.

David Casey: Thanks, Aaron. So across the region we are seeing Brazil stabilize, and as we've said, Argentina has liberalized and Mexico, we've got this potential consolidation story yet to play out. Stepping back and looking at the market as a whole, Lori, do you think that Latin America will gradually move towards fewer and stronger airline groups, or do you still think we'll have that political resistance that we've seen in recent years?

Lori Ranson: I think it's a bit of both. I do think that there are going to be fewer stronger airline groups. You have ABRA, you have LATAM, you have JetSMART, you potentially have Viva and Volaris. And so I do think consolidation is probably beneficial for the region just because you can build up scale and tap the potential of the market. But we've talked for years about just politics and the roadblocks that governments can put up to growth, and it's a real challenge for the region. It's been a challenge probably since Aaron and I have been covering it, and groups and airlines are working to educate governments about the benefits of aviation, but buses don't have the same level of taxation as airlines, and that's been the case for years and there's really been no movement in terms of trying to change that. So those carriers are going to face the political hurdles that they've always faced, but maybe with a greater scale they can tackle those hurdles in a different way.

But yeah, I think that they understand how politics works in the region and they're going to try their best to change minds. But we all know it's a slow process in terms of getting reform and because administrations can change so rapidly and just look at Peru and the airport there. I mean, how many transport ministers have there been in Peru over the last few years? So yeah, I think that's the biggest challenge. But I do think that carriers understand that challenge and they're going to keep up the work in terms of changing minds of politicians.

David Casey: Well, as you said, yeah, it certainly is a slow process, but I think what sets probably the current growth cycle apart from maybe previous ones is the strength with which airlines are approaching it. Obviously, they've restructured their balance sheets, they're showing more strategic restraint, and I think they've addressed some of the internal weaknesses that historically have eroded profitability and really sort of affected previous recoveries even when demand conditions were favorable. Well, that's all for Window Seat this week, but Aaron and I will be in Rio next week continuing these conversations on the ground at Routes Americas. And if you can't join us in person, you can follow full coverage, analysis and interviews from the event on aviationweek.com where we'll be reporting live throughout the week. So with that, Aaron and Lori, thank you both very much for joining me today. Thanks to our producer Cory Hitt, and thanks to you, our listeners. Don't miss an episode by subscribing wherever you get your podcasts. Until next time, this is David Casey disembarking from Window Seat.