LeoDF
Topic Author
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The Future Of Latin America

Mon Mar 01, 2004 9:01 am

Hello!

I was reading yesterday an article about Lloyd Aereo Boliviano (LAB) where its Mexican Regional Manager talked a bit about their future plans. Included were the arrival of their 3rd and 4th 767's, along with new services to Mexico City. What I understood is that they were going to offer 2 flights, one on the morning and the other at night. And that soon they will upgrade their equipment as well and were trying to do so for Cancun as well.

I also read about Avianca's probable purchase by Continental or at least a bid, that Lan Chile also made but was far too low.

So, this kept me thinking. South America will sooner or later end up with few airlines controlling the market.

1) Lan Chile: for excellence the biggest and most known airline of the region. They own subsidiaries in Peru and Ecuador and have tried to start one in Bolivia and Argentina. And of course, wanted to take over Avianca. No real competition menaces this airline, for the countries where it has airlines have no other airlines, or insignificant and troublesome ones!

2) Aerolineas Argentinas: after being purchased by Air Plus Comet, they had their second chance. They are growing again, with their very first 747-400. I also think few competition is encountered by this airline in Argentina. Southern Winds was doing well, but then shrank or disappeared, don't know, same as LAPA.

3) Varig: recovering. Maybe the proposed merger with TAM would do both of them good. But at the same time, competition has made them open their eyes and start really doing their business. After all, that's what competition is all about, lowering costs, offering good service and become profitable.

4) LAB: encountering good competition from Aerosur that has become an international airline. Anyways, LAB is growing and is growing fast. Considering it comes from the 2nd poorest if not the poorest country in South America, their recovery after being taken over by Bolivian businessmen has been spectacular. And their future plans call for even better times. Competition has also made them better I suppose.

5) TAM: good strategy. With TAM Mercosur controls passengers in Paraguay, which lacks a national airline. Also has been growing a lot, since its fleet of Fokker 100's.

6) Avianca: near death?

7) Avensa: ???? I have no idea! The biggest in Venezuela. But have no idea of their future plans. I heard or read that maybe Viasa returned. If so, this would put Avensa in a difficult situation, after a long time without real competition.

So, if we put it this way:

The really big ones and powerful in South America are:
Lan Chile (Europe, Australia, America)
Aerolineas Argentinas (recovering) (Europe, Australia)
LAB (starting in Europe with once weekly to Madrid, America)
TAM (Europe)
Varig (Europe, USA)

Will South America end up with only these airlines? Lan Chile will probably end up with an affiliate airline in each and every country throughout S. America!

I guess these are the strongest and probably the most likely to survive.

What do you think?
Saludos!

A. De Leo
"PiloT"
Lloyd Aereo Boliviano
 
MAH4546
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RE: The Future Of Latin America

Mon Mar 01, 2004 9:05 am

The really big ones and powerful in South America are:
Lan Chile (Europe, Australia, America)
Aerolineas Argentinas (recovering) (Europe, Australia)
LAB (starting in Europe with once weekly to Madrid, America)
TAM (Europe)
Varig (Europe, USA)


Varig also flies to Asia (Tokyo) and starts South Africa (JNB) in April. TAM also flies to America, with daily service to Miami. Starting in May, they will have double-daily service to Miami, including non-stops between Miami and Salvador da Bahia. Aerolineas Argentinas also flies to America, with service to Miami and JFK.
a.
 
chepos
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RE: The Future Of Latin America

Mon Mar 01, 2004 9:46 am

Southern Winds is still around and they are flying between EZE and MIA & MAD, and concerning Venezuela - I would say Aeropostal is the largest carrier in Venezuela.
Chepos
Fly the Flag!!!!
 
Southamerica
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RE: The Future Of Latin America

Mon Mar 01, 2004 10:03 am

Avianca: near death?

Well, in some form, yes. But they are still operating normally and waiting for the eventual investor.


Avensa: ???? I have no idea! The biggest in Venezuela. But have no idea of their future plans. I heard or read that maybe Viasa returned. If so, this would put Avensa in a difficult situation, after a long time without real competition.

Avensa couldn't be further from being that. Anyways, as Chepos said, the dominant player in Venezuela is Aeropostal, followed by Aserca and Santa Barbara.



Add to the list..

Avianca (Europe and America) (They also currently own a larger, younger fleet and network than LAB)


SOUTHAMERICA
 
soamsky
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RE: The Future Of Latin America

Mon Mar 01, 2004 10:27 am

"The Future of Latin America" is the name of this thread; however, no mention of Aeromexico, Mexicana, Grupo Taca, copa that are part of Latin America. You just focused on South America. So, what should we discuss here, Latin America or just South America airline future?
Soar the blue of the South American Sky
 
LeoDF
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RE: The Future Of Latin America

Mon Mar 01, 2004 10:45 am

Sorry, my mistake SoAmSky! It should have been The Future of South America.

Love's got me stupid!

A. De Leo
Lloyd Aereo Boliviano
 
YV136C
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RE: The Future Of Latin America

Mon Mar 01, 2004 10:51 am



Indeed, Avensa is good as gone! Aeropostal has the leading role in VEN.

Luis
Proud to work for Embraer FLL!
 
FMAL
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RE: The Future Of Latin America

Mon Mar 01, 2004 11:05 am

Isn't Avensa already out of business, and has been for some time now?

I don't see LanChile getting an affiliate here in Brazil any time soon. I mean, never say never, but Brazil already has Varig, who is indeed the largest airline in Latin America and perhaps the best known (and not LanChile), and TAM, the up and coming airline who is now fading out their F-100s and replacing them with Airbus aircraft. Furthermore there's Gol, the low-cost carrier who is making money and gaining market share. So LanBrasil, not likely.

Vasp might be the next Brazilian carrier to go. LanChile has grown since it became almost the sole airline of Chile, which is now the country in the best shape in Latin America. Peru and Ecuador are small markets and didn't have a major airline, so it was relatively easy for LanChile to get into those markets. Argentina, Brazil, Mexico, etc; those are another story.

The Varig and TAM merger here in Brazil is not likely to happen, the best scenario would be the creation of a holding company that would control both airlines, who would then maintain their own identities. They are two completely different airlines, with different philosophies and history. Varig is the third oldest airline in the world (if I'm not mistaken).
 
YV136C
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RE: The Future Of Latin America

Mon Mar 01, 2004 11:08 am

FMAL,

Avensa is operating B1900's to two or three domestic routes. That is what's left of them....

Luis
YV136C
Proud to work for Embraer FLL!
 
LeoDF
Topic Author
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RE: The Future Of Latin America

Mon Mar 01, 2004 11:11 am

I would like to add Central America and Mexico if you allow me.

So, in Central America we have of course:

1) TACA: leading airline. Took over NICA, AVIATECA, La Costeña, Sahsa? You see my memory today isn't at its best. Well anyways they rule Central America and are trying to infiltrate into South America with Taca Peru.

2) COPA: with the influence and capital of Continental, COPA has managed a good position within Latin America. 2nd largest of Central America of course.

Not strange that one is Airbus and the other Boeing HA! (TAM-Varig???).

Mexico:

Aeromexico and Mexicana: as rumours popped this past week about a possible merger I have no idea of what to say! The idea of forming one airline could be good in an administrative point of view (money saving, less work force, standarization of routes) and maybe in the future they would recover their work force with growth!

And others such as Aviacsa, Azteca, Aeromar and Magnicharters are, to my eyes, in a good position. They represent fierce competition to the Cintra conglomerate. But some others that I thought had come to earn a well deserved position on Mexican skies have dropped services such as Allegro and possibly in the future Aerocalifornia!

Caribbean:

A lot of little airlines. Of course some big ones as Cubana, Air Jamaica and BWIA. But I guess competition there isn't as harsh as in continental Latin America. Don't know really! Maybe someone can help me!

BTW: sorry about Aeropostal! Had forgotten all about it!!

Cheers!

A. De Leo
"PiloT"
Lloyd Aereo Boliviano
 
chepos
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RE: The Future Of Latin America

Mon Mar 01, 2004 11:20 am

No one mentioned Lan Dominicana ,Lan Chile's Domincan subsidary . In the Dominican Republic there's also Air Santo Domingo (which has been flying from SDQ to SJU and JFK).
Chepos
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MarcoPolo747
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RE: The Future Of Latin America

Mon Mar 01, 2004 11:28 am

Oldest surving airline in the world is Avianca, founded in 1919 as SCADTA (Sociedad Colombo-Alemana de Transportes Aereos)- source : R.E.G. Davies, Airlines of Latin Anmerica since 1919.

Biggest SOUTH American airline in 2003 (Source ATW) was Varig that carried 9.108.000 passengers and had 22.072.448.000 RPKs. LAN Chile carried 4.495.000 passengers and RPKs were 10.301.000.000.

I don't have figures for Mexicana but I believe they are the biggest LATIN American airline in number of passengers and RPKs as well but I don't have the figures, maybe our Mexican friends ?

TAM flies a daily GRU-CDG 332 in codeshare with AF as well. It replaced most of its 100s and now flies 56 320s/319s.

 
LeoDF
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RE: The Future Of Latin America

Mon Mar 01, 2004 11:31 am

I think Marcopolo747 Varig is the biggest in Latin America. Neither Mexicana nor Aeromexico carried more than 8 million each. So Varig is still the king of the skies in Latin America!

Lloyd Aereo Boliviano
 
Jj
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RE: The Future Of Latin America

Mon Mar 01, 2004 12:05 pm

As to Argentina, the situation is pretty much this: AR controls the domestic market (About 80% of the traffic is theirs), and they are making money here....

There are only two other airlines competing right now:

Southern Winds (which has been granted a subsidy to operate the airline branch of the government LAFSA 'Lineas Aeras Federales') with about 6 737's. But their situation is critical. Even though the subsidy covers all fuel costs, they still loose money on the domestic routes. They are slowly adding more destinations but few of them have daily service...

American Falcon is the other little airline, with 2 737's and 2 Fokker 28's. But they are in a similar situation, even though they do not loose as much money as SW.

LAPA and DINAR, have completely dissapeared, some of the workers have been hired by SW/Federales...

Speaking of the international market, AR has a total control of it. They are only challenged by SW on the Madrid route. I'm not sure if they are operating into Miami now, since they have now only 1 767.

But AR does not only have a total domination of the market.... they make money as well! Last year's result returned a profit of about 40 mill euros. Not bad given the current situation....

So AR is expanding it's wings. They have already received 1 A 310 and 1 747-400. The next additions to the fleet will be:

3 Boeing 747-400 (May 2004/ Jan 2005)
1 Airbus 340-200 (Jun 2004)
1 Airbus 310-300 (Oct 2004)
8 Boeing 737-500 (May/Dec 2004)
2 MD 83 (Jun/Jul 2004) - An additional one if the aircraft that lost one of it's landing gears the other day is a write off.

What AR intends to do with this is:

The Airbus and Boeing 747-400's will replace the 5 airworthy 747-200's.
The Boeing 737-500's will replace the 5 oldest 737-200's and will be used to expand the domestic/regional market.
The Md's will be used to expand the regional market.

As you can see, AR is growing again. Let's just hope they continue this way! if they do, they can certainly be a big contender in the South American market...

 
MRb757
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RE: The Future Of Latin America

Mon Mar 01, 2004 12:09 pm

What about TAME? I think thats an Airline in Ecuador? Any one know what's up with them? All i know is that they recently got new airbuses??? Any one know anything about TAME?
 
TBCITDG
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RE: The Future Of Latin America

Mon Mar 01, 2004 12:11 pm

I think that Lan would find it very hard to commence operations in Brasil or even Aregtnina for that matter. Although only time will tell.
Aerolineas Argentinas are in current talks to purchse Pluna (Uruguay) from Varig.
They have also posted their intention to begin:
Aerolineas Australes Bolivia
Aerolineas Australes Paraguay
Aerolineas Australes Uruguay
Aerolineas Australes Chile
I wonder how this will effect the local carriers?
I am not too sure as to wether they will protest or not the emergence of Lan Argentina seeing as they too would like to commence operations in Chile. Who knows?
They are also to commence regional hubs within Argentina and flights to Beijing this year (who knows?)
 
MAH4546
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RE: The Future Of Latin America

Mon Mar 01, 2004 12:12 pm

I'm not sure if they are operating into Miami now, since they have now only 1 767.


They still fly to Miami.
a.
 
mia
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RE: The Future Of Latin America

Mon Mar 01, 2004 12:18 pm

As the Venezuelan friends have pointed out. Alas de Venezuela a corporation that bought the name Aeropostal is the largest in Venezuela. I would like to point out to some people that the Varig/TAM merger is not going to happen. They are planning on codesharing but nothing else. I know this from reliable sources within Varig. Also about Avensa, after the Boulton family was subjected to a horrendous kidnapping Servivensa collapsed. I know they still have planes, hangar space and airport space (I know in Caracas and Barquisimeto). I like LanChile, but I have spoken many times to my father, their fleet is so stretched out with Lan Dominicana/Ecuador and Peru. They need new 767's. I know they started with the A340s to NYC and LAX but this seems like a dangerous deviation from their proven business plan. About Avianca, I flew with them and they decided to change me 2 hour stop over to a 10 hour one. The horrendous service I received during that time on the ground was so humiliating that I wish the worst to Avianca. I am sorry to Colombians but Avianca can rot in hell.
"Like all great travelers, I have seen more than I remember, and remember more than I have seen."
 
EddieDude
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RE: The Future Of Latin America

Mon Mar 01, 2004 12:47 pm

MarcoPolo747, I read an article in LatinTrade about three months ago in which it was clear that RG was the largest Latin American carrier both in terms of passengers and RPK's. AM, JJ and MX -I believe in that order- were (somewhat far) behind RG fighting for second place (too close to call) in terms of passengers and then was LA, although in terms of RPK's I think LA was second and then came the Mexican carriers and JJ. Or so I recall; unfortunately I don't have the issue with me anymore.

Now, I think LA is perhaps the airline in the best position in the region. They not only have a nice network of routes, including destinations in Europe, North America and Oceania, but also a very good reputation and a healthy balance sheet.

From what I have read and heard, RG is doing not so well, especially because of their debt and their losses. RG has always tried, I believe, to be at the forefront of the Latin American carriers in terms of fleet and destinations, and that unfortunately comes at a cost. In addition, although I have never personally experienced flying with RG, I understand they don't have consistent service. In any case, we might see them starting flights to China soon and will definitely see them going back to South Africa too (oh, and a separate thread discusses they are getting more 772's and are going to start flying them to MEx, SCL and many other destinations at least temporarily). As for JJ, I really liked them when I flew CGH-VIX-CGH with them a month ago. The Airbuses are pretty new and in great shape and service is good (I really look forward to flying MIA-GRU in JJ's business class some day); in addition, I think that although their international presence is limited, its routes and codeshare partners are very well thought (and hopefully the investment in Transportes Aéreos del Mercosur is profitable). Though RG is a much "larger" airline in terms of pax and RPK's, if the two companies merged today as it was originally planned, JJ's shareholders would end up owning almost 95% of the new company because of RG's debt, so that is just a sign that JJ is healthier and more valuable. With respect to the merger, both companies have informed the regulatory authorities in Brazil that they have decided to postpone it two years and will instead focus in furthering their codeshare partnership and in consolidating backroom activities in a 50-50 joint venture company in order to cut costs.

I did not know that LB was so ambitious. If their flight to MAD proves successful and they find a way to become an established player in the MIA-South America market, then it shall see better times. As far as I know, their flight from VVI to MEx stops in PTY and is serviced with a 722, so it would be nice if they started offering non-stop service with newer, widebody aircraft. If they do and if they indeed start CUN, they can become a viable alternative for Mexicans going to Chile, Bolivia and the Mercosur countries and viceversa, especially if they offer fares lower than those of its competitors. I don't know how good LB is in terms of service quality, but hopefully it will become a worthy competitor.

I think the ownership of AR by Grupo Marsan's has proved to be a positive thing and it is nice to see them getting 744's and starting flights to PEK (RG will follow in my opinion). Hopefully they will return to MEx and/or CUN soon... it sure will be a welcome addition to the group of airlines that can be found at MEx.

I have read here many times that AVENSA is as good as dead, but I am glad to hear that Aeropostal is doing good. I guess the current political and economic environment in Venezuela will prevent the Venezuelan aviation industry from growing, but hopefully that will change soon.

In connection with CM, I believe that the location of PTY, the attractive fares and the very smart connection system is doing wonders for CM. My friends from Santiago de Chile always fly CM to MEx since service is good and comes cheaper than AM or LA. I just feel that their all-737 fleet, although very modern, is not a good reason to fly them from PTY to destinations like GRU or EZE.

I really don't know much about TACA, except that they are doing okay and that they have good service.

And about Mexican aviation, I think it's best to refer to the thread called "Future of AeroMexico" since so many things are going on at the moment. I just hope that all these internal movements in CINTRA do not derail the aggressive expansion plans of MX and the recovery of AM. I like AM and its long-haul 767's (and the new 73W's are awesome) and I really like MX's A32x fleet, so I hope they stay independent and add new destinations in Europe and South America.
Next flights: MEX-LAX AM 738, LAX-PVG DL 77L, SHA-PEK CA 789, PEK-PVG CA A332, PVG-ORD MU 77W, ORD-MEX AM 738
 
MarcoPolo747
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RE: The Future Of Latin America

Mon Mar 01, 2004 1:02 pm

Amigo Eddie,

I remember some years ago MX was 1st in RPKs but such things change continously. My experiences with LA were very good but they will never play a big role because their dosmestic and regional markets are small, however they might build one by adding LAN-Peru, LAN-Ecuador, LAN-Colombia and so on. In terms of passenger numbers the big players will always be in Argentina, Brazil and Mexico.
RG will start flying its own aircraft to JNB 3x a week , 772s bought from BA, recently it added 2 M11s bought from LX.
I would say it will also start flying to PEK very soon as an extension to its NRT service for the moment.

At the moment, CM is the best option from Brazil to Central America and Caribbean with its daily 73W service to PTY where connections are easy.

JJ is flying charters to Aruba and Havana, it is rumoured that the HAV service might become a regular weekly service.



 
EddieDude
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RE: The Future Of Latin America

Mon Mar 01, 2004 1:52 pm

Hey Marco, nice to hear from you. How are you doing my friend?

I looked in the net for the statistics I was quoting but I was unsuccessful. All I could find was a ranking from 2001. The link is http://www.kiat.net/travel/airlines.html/ and it shows that RG was Latin America's number one in 2001 with 26 billion RPK's, then AM with 14.1 and then MX with 13.4. I guess the numbers may have moved a bit downwards during 2002 and that 2003 was overall similar to 2002.

It is interesting that JJ is considering to start scheduled service to HAV. I find it a bit strange, though, since JJ's three international flights seem to cater to a mix of business and leisure pax, whereas HAV will be a 99.9% leisure destination and that's not where the money is. To be honest, I would have expected JJ to start fliying to SCL, MAD or JFK before HAV. In any case, this would probably be the only Mercosur flight to HAV and, therefore, passenger loads should be good. Besides, the caution that JJ has demonstrated when it comes to international routes is a sign that they do not enter a market unless they are certain that it will work, so that's also a good sign. What do you think?

Next flights: MEX-LAX AM 738, LAX-PVG DL 77L, SHA-PEK CA 789, PEK-PVG CA A332, PVG-ORD MU 77W, ORD-MEX AM 738
 
ghost77
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RE: The Future Of Latin America

Mon Mar 01, 2004 2:44 pm

Marcopolo747,

Pax carried in 2003 by
MX: 7,873,450. Domestic: 4,942,782 International: 2,930,668
AM: 8,733,132. Domestic: 6,665,088 International: 2,068,044
TotaL: 16,606,852.

RPK's
MX: 11,531,367.
AM: 13,377,347.
TL: 24,908,714.

So with your numbers RG carried more passengers. But AM almost did the same number of passengers RG diw with a smaller fleet and less RPK's offered.

% Load factors in 2003 for MX: 63.4 vs. a 66.4 with AM.

Ricardo APM  Smile

Ricardo Morales - flyAPM - ¡No es que maneje rapido, solo estoy volando lento!
 
TBCITDG
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RE: The Future Of Latin America

Mon Mar 01, 2004 3:47 pm

Well said MarcoPolo;
In order for Lan to increase their peresence in South Aamerica, even the rest of the world, they will need to tap into the Argentine/Brasilian and Mexican markets, some of which are protected (at the moment) by their countries Goverments.
Even operations like Lan Dominicana, Lan Peru can only grow so much, so I am sure Lan will try to make a big push into other Latin Countries.
I have no evidence, but I get the feeling that unless they do enter other markets, Lan will stagnate in terms of growth.(obviously way down the track).
They have stated publicly their intentions of becoming Latin Americas top airline, although I think that they will find that a little hard with the likes of Varig/Mexicana.
 
AR385
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RE: The Future Of Latin America

Mon Mar 01, 2004 4:59 pm

This thread is incredibly interesting but I believe that it is too encompassing for each of us to give an accurate portrayal of the market in SouthAmerica, plus Mexico. I will try to post what I know and what I've experienced.

I believe four conditions IN THE REGION we are discussing, are necessary for an airline to be successful

1) A solid, strong, domestic and global economy
2) Good O&D traffic
3) Good, independent, profit-oriented management
4) Geography

Now, if I measure each airline or country by each of these indicators things look clearer to me. Remember you can agree or disagree.

In the case of AM and MX as a whole and the other airlines in Mexico, things look good, but I don't think they fulfill #1 and #4 of my points. Another thing is, why the heck, in a country with over 100 million people only 20 million a year or so use air transport? This is a huge, untapped market that is overlooked and is the result of one of the worst income distributions in the world. But I would suggest to go with EddiDude's (I believe) advice, and go to the thread "future of Aeromexico."

Central America is a gamble. They have no #2, and marginal #1 at best. I'll give them points for #3 and number #4. In general TACA has incosistent service at best, while I believe CM has reached the limit of its growth.

Colombia, well, #1 seems to be ok, #2 also, #3, lousy, and #4 has no impact whatsoever. I remember a comment where someone mention AVIANCA can rot in hell. Well, I wouldn't put it in those words, but one time in 2000, they stranded me in the middle of the summer in Barranquilla airport for 6 hours. If it wasn't for the lack of, well, everything (refreshments, food, etc) and the bats flying around inside the terminal it probably would not have been so bad...How's that for service? Continental is taking a huge risk with this investment.

Venezuela, not much to say there. I'll be surprised if any airline survives after the current problems the country is going through. So for now it can be ignored

About Ecuador. It has similar problems to Venezuela, plus TAME has a tendency to crash often. Wouldn't fly them if it was for free. I believe we can ignore them too for now.

Bolivia is very interesting. LB is a basic, few frills airline, with good service, clean, safe and well maintained planes, the pilots are the best in the region and their fleet renovation program is making sense. They have a good strategy and have been stable and well managed for years.They might very well become a force to be reckoned with if the government sorts itself out and if the GNP starts growing from the paltry 9 Billion USD/year. Geographically they could not be in a better position in South America. Funny they don't see that, they insist on destabilizing themselves politically for want of a lost coastline.

Argentina is an interesting case. It could go both ways. AR could continue to grow and thrive or it will crash and burn again. As MarcoPolo has said, Mexico, Argentina and Brazil are a different story. The problem with Argentina is that they are not out of the woods yet. And the reason they are having such a strong recovery is that they have suspended payments on their debt. This has created a bubble, and a fake recovery. We know what happens to bubbles. What will happen when Argentina finally needs to start paying its debts? AR is constantly fearing that its planes will get impounded. However, with a control of 80% of the domestic market I guess that's a cashcow. I have no idea about service. Last flew them EZE-MX), Mexico">MEX, 747-287 in 94 in F and it was a disaster. Southern Winds is just (now) a government populist contraption and is just being kept around so people can say there's "competition" I wonder what happened with LADE? Anybody knows? In conclusion, Argentina's future to me is 60% they implode and 40% they make it.

In Chile I believe everything has been said here.. Yes, Lan is a great airline, outstandingly well managed, and all that, etc..I just think that the country needs to keep its growth rate on its economy constantly moving up, because their O&D traffic is not the best. And yes, surprise, Chile has a strong problem on the income distribution side. That's a strong weakness.

It's hard to find anything to say about Brasil. They have everything to have one of the greatest airlines in the world. And I believe they actually do. The problem on RG is management. Maybe because it's a foundation and not primarily profit-oriented it's been managed badly for years and years. I flew RG in '99 on their 743, C class on the upperdeck GRU-MIA and many other domestics on the 737-300's. I was not impressed with the service. Domestically, however, I think they are very strong. I never had trouble finding a flight to anywhere, Salvador, Araripina, Ilheus, Recife, etc. And the Ponte-Aereo is a cashcow. If they could better their service a little bit and get better managed, forget about LanChile, RG would be the airline to watch. I agree with others, VASP is in its death throes, and JJ, well, they were great. I think, though when their owner, founder and real talent in the company died, things went downhill. I'm skeptical in the long term for them.

Peru's civil aviation has been a mess for years and years. Aeroperu was killed in '72, I think, then revived again in '78? then died again in '89 until AM came and got it going again (and sacked it with Prevoisin laughing all the way to the bank) I don't know if Faucett is still around or AeroContinente. But the whole aviation scene there has been a mess for years, so I can't find much to say about them.

There. My two cents. this started kind of very structured, but then sort of lost that. I hope you all can read it.

AR385

 
FMAL
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RE: The Future Of Latin America

Tue Mar 02, 2004 1:36 am

I agree with AR385. The major problem Varig had was management. It seems that things now are a little different. The thing with Varig is that for a very long while, they were the sole airline in Brazil. There was Vasp and Transbrasil, but they never came close to Varig. Varig was at one point, a billion dollar a year airline, net profits. Then came deregulation, and they never adapted. So Varig had a huge staff, all with tons of benefits (people said it was great to work for Varig) because they never had to worry about that, the Air Shuttle alone paid for everything. Things changed, and they never adapted, so they almost went broke.

Now, given the current situation in Brazil, and how disappointing this government is, I doubt that they would let Varig shut down. They are now way clear of that, renegotiating debts and doing well (the operation is already profitable again). Should they emerge, with some help, from their situation, Varig is the airline to be reckoned with. As well they should be.

LanChile is an admirable airline. I never flew them, but sure have the curiosity and the desire to do so. Their livery is, in my opinion, the best one around anywhere in the world. But Chile is a small country, and as was said before, an economic turn around in Chile (unlikely as it may seem) could change their scenario pretty quickly. But they seem to have a solid business plan, and are carrying it out and so far, its working.

I think the same goes to Argentina. Should the economy stall again, who knows what happens to Aerolineas?

The pattern seems to be, the continent and the local economies can only hold one, two profitable airlines, tops. They just don't have enough traffic to handle many airlines in one country. Brazil, the largest of all Latin American countries, can't handle more then 3 airlines, but the general opinion is that two "big" ones is more then enough, 3 is already a strecht.
 
LeoDF
Topic Author
Posts: 349
Joined: Mon Aug 02, 1999 11:44 am

RE: The Future Of Latin America

Tue Mar 02, 2004 5:05 am

Thank you AR385! I sure did find it interesting. This region has a lot of potential! The problem or question is the future. Thank you all for your comments. Sometimes mine don't seem to fit! Or lack information!

I try to do my best, but as said earlier, love has hit me hard! And I am not as close to aviation as before! But, still interesting and learning!

Saludos!

A. De Leo
"PiloT"
Lloyd Aereo Boliviano
 
123
Posts: 616
Joined: Sat Nov 29, 2003 3:49 am

RE: The Future Of Latin America

Tue Mar 02, 2004 7:06 am

In post 18 it is mentioned that LB should upgrade aircraft to MEX. Before entering MIA/EZE/GRU/MAD with their 767's, LB flew into MEX with 767 nonstops.

In post 1 it says, MEX should get 2x daily 767 flights. I did not hear that yet and it would surprise me, as I know now they fly 4~5 times a week to MEX, and if they should suddenly fly 2xdaily with 767's, that would be an enormous capacity increase.

It seems however that MIA/GRU/EZE/MAD and now also IAD are higher yield markets and they prefer to take the 767's on those routes (apart that the 727 does not reach MAD!).

How far will LB be a global player: They are working on it and once they get the LAX route on the way (they have it in plans) they will be a big step forward. Now already, MIA-South South America (meaning South Brazil-Paraguay-Argentina-Chile) is in good hands of LB, and if they get Asia-USA-South America conections via LAX, they could win?


Post 1 indicates LB has competition with 5L (Aero Sur) on international routes. Right. But since LB was founded 1925 and have a great deal of experience, I tend to think they will have a broader international reach. Aero Sur has done a good job in getting their market share, though.


Overall> Topography in Latin America and road conditions are such, that if you are in a hurry, you fly. And the airlines win. So, I cannot even understand why airlines in the region don't make money as they are generally with full flights, at least to / from Bolivia, as well as within Bolivia?

Good posts!

 
FMAL
Posts: 469
Joined: Tue Jan 13, 2004 9:16 am

RE: The Future Of Latin America

Tue Mar 02, 2004 9:54 am

I think the currency factor is a major player in the poor financial conditions of Latin American aircraft.

Take Brazil for example, where 1 dollar is almost 3 reais. So the airlines get most of their profits in Reais, but pay all of their maintenance in dollar. Plus fuel prices here are attached to the dollar too. They can barely make it. Most of the flights are full, but the cost per passenger is much higher. Also, taxes in Brazil are just unimaginable. They can single handedly crush an airline. European airlines pay close to 12% in taxes on every ticket issued. American carriers pay around 7%, Brazilian carriers pay 35%. Our airlines have to pay many taxes upon refueling here in Brazil, but the foreign airlines are excused from most taxes. Its unthinkable....they make our airlines pay and excuse much larger and solid airlines. Then they wonder why things are so bad.

Unfortunately, I don't see a light at the end of the tunnel for my country. Things just seem to get worse. The airlines are recovering, but how long will that last?
 
ArgInMIA
Posts: 475
Joined: Fri Nov 09, 2001 4:07 pm

RE: The Future Of Latin America

Tue Mar 02, 2004 1:36 pm

AR385 I dont think Argentina will go bust anytime soon.. the Economic Recovery is not fake.. Payments to the IMF and all the international asociation (world's bank etc) are current.. they just defaulted on the Private Bond Holders.. out of witch arround 80% are argentinians themselfs.. this kind of growt is a normal rebound for a country whose economy fell by arround 18% in just one year... it also seems like Kirchner will eventually win with his proposal of paying just 25 cents of a dollar for every bond.. he has way over 95% support in this by the citizens of Argentina, Also just some days ago Lula and Kirchner agreed to negociate with the IMF together.. between them they owe way over 500 Billon dollars.. and it gives them much more negociation power, Brasil is not on a good situation.. they agreed on 4.5% of their GDP and its becoming very difficult for them to meet that, Argentina agreed on 3% and if having no problems so far.. remember what Keynes said.. If you owe the bank $1000 then you are in problems, Now if you owe the bank 1 Millon.. then the Bank is in Problems.. My Forecast for latin america is that Argentina will continue to grow for at least 1 and a half year more before it slows down.. chile is some how limited by themself.. they will reach its peak soon and will just stay flat.. LanChile cannot take much more money from Chile itself since its very limited.. unless they finally make it into Argentina or Brasil (I Don't see that happening any time soon) they will just stay the way they are now.. BTW>. i head they will unveil a completely new Paint Scheme very soon... Varig is on the edge .. it all depends on brasil's economy... somehow i feel they are where Argentina was in 1999... lets hope it recovers before falling all the way down like we did...
LAB is a very neat airline.. small but very well taken care off.. they will continue to grow slowly but shurely.. but again..its limited by its own country..
Alto.. Mucho mas alto.. hasta la cumbre
 
keno
Posts: 1809
Joined: Thu Feb 19, 2004 5:46 pm

RE: The Future Of Latin America

Tue Mar 02, 2004 2:32 pm

Which South/Central American airline that should fill the gap in SkyTeam? I think Copa is quite obvious due to its link to CO. TAM would be a great addition for Brazilian domestic routes but lack international services. There is a need for a partner in the region of Brazil/Argentina/Chile/Peru/Bolivia such as alliance partners LA & RG, since the northern part can be covered by Copa & Aeromexico. I know Copa has good network as far south as EZE but we need a carrier that could provide services between these more southern countries.

[Edited 2004-03-02 06:37:45]
 
EddieDude
Posts: 6241
Joined: Fri Nov 14, 2003 10:19 am

RE: The Future Of Latin America

Tue Mar 02, 2004 2:56 pm

I also think it is only a matter of time before we see CM joining SkyTeam. Many things are bound to happen in Latin America soon, I think. For example, there has been talk here in a.net that AM and MX may swap some Latin American routes now that they are both trying to expand to new markets (take it with a grain of salt, since the aviation industry in Mexico seems to be in turmoil and many things that cannot be readily ascertained are being said). This could lead to a stronger presence of SkyTeam in South American markets where they are not so strong at the moment. Also, I think that both AA and AF will try to lure JJ to oneworld and SkyTeam, respectively. I don't know which one will eventually convince JJ, though. I think that JJ has been very cautious with its international routes but maybe if they decide to join an alliance they will expand their international network to include new destinations (Marcopolo747 mentioned above that they might start regular service to HAV).

Nothing would please me more than seeing AM and MX expanding further in South America, but this really depends on the financial performance of the two airlines, on their ability to add new widebody planes without incurring excessive debt, and on the improvement of economic conditions in the hemisphere so that a steady number of business and leisure passengers is assured in flights between MX), Mexico">MEX/CUN and South American cities.
Next flights: MEX-LAX AM 738, LAX-PVG DL 77L, SHA-PEK CA 789, PEK-PVG CA A332, PVG-ORD MU 77W, ORD-MEX AM 738
 
TBCITDG
Posts: 851
Joined: Sat Jan 10, 2004 5:17 am

RE: The Future Of Latin America

Tue Mar 02, 2004 2:57 pm

It seems that Aerolinneas Argentinas may have a larger slice of the market if reports out of Argentina are true.

American Falcon (another national carrier) said it will suspend all flights during March and only operate those that are "charter".
The airline is rumored to have lost approximately one million dollars during November and December of last year.They are appealing to the Argentine government for a "loan" that will eventually be paid back. They state that they should get some form of financial assitance since DINAR/SW/LAPA all merged and now get approximately 3.6 million dollars worth of subs.

On another note, Southern Winds has started services using a 767-300ER to Madrid.
Who knows where these two airlines will end up. AR Must surely be sitting back and enjoying the Argentine market dominance.
 
soamsky
Posts: 293
Joined: Mon Jan 26, 2004 3:41 am

RE: The Future Of Latin America

Wed Mar 03, 2004 4:07 am

"I think the currency factor is a major player in the poor financial conditions of Latin American aircraft.

Take Brazil for example, where 1 dollar is almost 3 reais. So the airlines get most of their profits in Reais, but pay all of their maintenance in dollar."


FMAL, I Agree with you, but not to the fully extend. You have to consider too that labor cost in Latin American countries are way down compared to labor cost in North America and Europe.

I think that the real burden is on the Latin American passenger. Fares they pay are comparable or even higher that fares offered in developed countries. For instance, last year I wanted to go to Chile, the lowest fare available was more than twice of a ticket to go to Europe. Not to mention that international fares are always priced and sold in dollars (or dollar conversion). Even fares within a L.A. counties are usually higher or comparable to domestic fares in USA for instance. In Latin America air travel is for many people a luxury they can't afford.
Soar the blue of the South American Sky
 
AR385
Posts: 6742
Joined: Fri Nov 07, 2003 8:25 am

RE: The Future Of Latin America

Wed Mar 03, 2004 4:34 am

SoAmSky

I disagree with you. Labor costs in Latin America, In general maybe low, but that's only on unqualified labor. You need to add the huge costs in training them plus the hidden cost of very high turnovers. The other labor, is almost as expensive as in the US or Europe. And the cost of living in Mexico, is way above the US. (I lived in Virginia and Houston for 5 years).
 
EddieDude
Posts: 6241
Joined: Fri Nov 14, 2003 10:19 am

RE: The Future Of Latin America

Wed Mar 03, 2004 4:58 am

Let's not go into the cost of living discussion. It is all very relative. Evidently Texas is a state where the cost of living is pretty low, but try living in San Francisco, Boston or... NEW YORK!!! With the money that you can rent a nice, newish, three bedroom, 250+ sq. meters apartment in a high rise on Rubén Darío street in Polanco you can barely rent a crappy studio in Manhattan. With the money that you buy a Grey Goose vodka tonic in the bar on the roof of Mexico City's Habita hotel you can barely buy a domestic beer in the bar of the Hancock tower in Chicago. A subway ticket in New York costs 10 times more than a subway ticket in Mexico City. All is relative.
Next flights: MEX-LAX AM 738, LAX-PVG DL 77L, SHA-PEK CA 789, PEK-PVG CA A332, PVG-ORD MU 77W, ORD-MEX AM 738
 
AR385
Posts: 6742
Joined: Fri Nov 07, 2003 8:25 am

RE: The Future Of Latin America

Wed Mar 03, 2004 5:34 am

EddieDude,

I agree, let's not get into that. However, Monterrey is a lot more expensive than Mexico City. Specially rents, they are skyhigh too. Comparable to Manhattan.
 
MAH4546
Posts: 24608
Joined: Wed Jan 24, 2001 1:44 pm

RE: The Future Of Latin America

Wed Mar 03, 2004 5:46 am

And the cost of living in Mexico, is way above the US. (I lived in Virginia and Houston for 5 years).


Haha! Try living in New York City, Chicago, Los Angeles, DC, San Francisco, Miami, or Boston before saying that.
a.
 
luisca
Posts: 1530
Joined: Thu Aug 16, 2001 11:37 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:01 am

just one thing, i have to dissagree with the person that said that copa is on its peak and cant continue to grow. Copa is tied becouse the US (in a political move wich i will not get into right now) lowered its category from 1 to 2 nearly 2 years ago, panama complied with all the requirements but it has not been reinstated. Copa is planning on expanding its services in the US to become the best connection to central america from the US. TACA is in a real toughspot financially, they have posponed fleet expansion and reduced frequency to several key cities. You also have to take into consideration that Panama has the highest growing economy in the region, has a tourism industry that is growing at almost 20% per year and is one of the lead contenders to become the permanent office of the free trade area of the americas; unless the democrats win wich im hoping wont happen (shameless political plug  Smile ) Once panama gets its category 1 back (six months at the most) copa will execute its options on the 737-800 and convert its 700 options to 800 orders, and send back a cople of leased 700s for 800s. (all information given from a reliable source inside copa) they will increase frequency to key central american and colombian cities and open new US cities (and probably toronto too) Also joining Skyteam is rumored. TACA can in no way match this with the bad finnancial situation that they have so they will probably be reduced to a small national airline. the future is very bright for copa. also their south america to central america connections continue to grow. right now connecting traffic acconts for about 65 % of its revenew and they have reached an industry high 90% on time record.

[Edited 2004-03-02 22:09:40]
If it ain't Boeing (or Embraer ;-)) I ain't Going!
 
AR385
Posts: 6742
Joined: Fri Nov 07, 2003 8:25 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:05 am

MAH4546,

I stand by my statement. Go to any web site that compares cost of living and compare it with MTY. And please try to be more civil when you try to correct someone or post your opinion. I am going to suggest deletion to your post.
 
soamsky
Posts: 293
Joined: Mon Jan 26, 2004 3:41 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:06 am

"In general maybe low, but that's only on unqualified labor... The other labor, is almost as expensive as in the US or Europe."

AR385 you must be kidding me. Do you expect me to believe that labor cost in L.A. is the same as in the US or EU?? FYI, Labor cost here is about 4 times higher, Airline industry is not the exception.

"And the cost of living in Mexico, is way above the US" It could. But not because goods in Mexico are more expensive for the most part than in the US, but for the simple fact that wages are low (labor cost) that people don't have the same purchasing power than people in the US.
Soar the blue of the South American Sky
 
AR385
Posts: 6742
Joined: Fri Nov 07, 2003 8:25 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:12 am

SoAmSky,

Thanks for your civil opinion. I stand by my statement. There are many "hidden" costs that make Mexico very expensive. Services for example are very expensive compared to the US. Gasoline, training, infrastructure development, and one of the best, corruption.

However, my intention was not to start a discussion about cost of living or PP theory. My mistake. Let's keep the thread to its subject.
 
MAH4546
Posts: 24608
Joined: Wed Jan 24, 2001 1:44 pm

RE: The Future Of Latin America

Wed Mar 03, 2004 6:19 am

Go to any web site that compares cost of living and compare it with MTY.

Cost of Living Index:

1) Tokyo
10) New York City
20) White Plains
22) Los Angeles
25) Chicago
27) Miami
30) San Francisco
54) Boston
61) Atlanta
69) Denver
77) Mexico City
79) Detroit
80) Seattle
93) Winston-Salem
98) Monterrey

http://www.conway.com/ssinsider/snapshot/sf030707.htm
a.
 
AR385
Posts: 6742
Joined: Fri Nov 07, 2003 8:25 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:25 am

MAH 4546,

Ok, you are right. I was thinking about the hidden costs of this country, specially corruption. I don't think that's included, or property rights or the justice system, but again, let's keep the thread on its subject. My mistake in mentioning cost of living.
 
MarcoPolo747
Posts: 446
Joined: Tue Mar 20, 2001 7:37 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:28 am


It was confirmed today that once the season comes to an end JJ will not keep a regular route to HAV . Load factors in the 3 seasonal markets served by JJ with its 332s ranged from 79 to 83% and the highest average load factors were to Cancun !

AA seems aloof towards its partnership with JJ, maybe it is too busy with its own problems right now. Some months ago there were rumours that AA was seeking a marketing agreement with GOL but it never happened. SkyTeam needs desperately a partner in South America and the best option they have is JJ. If CM also joins SkyTeam it would work beautifully as both networks could integrate well, but presently, JJ has a marketing agreement with TA.

Decades of mismanagement have turned RG into a mess, I don't see that changing soon as the proposed merger with JJ is now farther down the road.

It has been wonderful to read all the comments related to this topic.



 
AR385
Posts: 6742
Joined: Fri Nov 07, 2003 8:25 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:35 am

Marcopolo747

I agree with you, this topic has been very interesting, and thanks for getting us back in track. I'm not so sure though, that JJ would be the right partner for Skyteam. In my OPINION, LAB is a good candidate too, or Avianca
 
MAH4546
Posts: 24608
Joined: Wed Jan 24, 2001 1:44 pm

RE: The Future Of Latin America

Wed Mar 03, 2004 6:39 am

It was confirmed today that once the season comes to an end JJ will not keep a regular route to HAV . Load factors in the 3 seasonal markets served by JJ with its 332s ranged from 79 to 83% and the highest average load factors were to Cancun !

Huh, JJ is flying to CUN and HAV? And a third seasonal market? Which one? I didn't know that. Are they scheduled charters, because they are not in the public res systems. Thanks!
a.
 
MarcoPolo747
Posts: 446
Joined: Tue Mar 20, 2001 7:37 am

RE: The Future Of Latin America

Wed Mar 03, 2004 6:45 am

They are seasonal charter flights in conjunction with tour operator CVC. Besides CUN and HAV they were flying to AUA(Reina Beatrix) for the summer season.
 
AA767400
Posts: 1892
Joined: Tue Jan 23, 2001 2:04 am

RE: The Future Of Latin America

Wed Mar 03, 2004 7:04 am

What about Panama-Europe? Does anyone think that CM might venture into
this market? Obviously with new equipment. And is ACES under Avianca's wing?
Or is it it's own company? I know both are in the same alliance.
"The low fares airline."
 
AR385
Posts: 6742
Joined: Fri Nov 07, 2003 8:25 am

RE: The Future Of Latin America

Wed Mar 03, 2004 7:11 am

AA767400

That's a good question. I think CM won't venture into that market, because it has it covered with CO. Also Panama is very attractive, I beleive more than tourism, becasue it is a great offshore operation. Europeans have their own offshores already. The Bahamas, Barbados, the Jersey Islands etc.
 
MarcoPolo747
Posts: 446
Joined: Tue Mar 20, 2001 7:37 am

RE: The Future Of Latin America

Wed Mar 03, 2004 7:12 am


ACES was absorbed and then shutdown by bankrupt AV.

I don't think there is a PTY-Europe large enough market unless CM would be able to attract enough 5th freedom passengers from neighbouring countries.