latinaviation
22nd Aug 2004, 22:07
There was also an excellent article in the Wall St. Journal on the success of the GOL IPO on the NYSE and Bovespa. GOL now has a higher market cap than LAN and most US carriers. The challenge for them will to keep up the growth, something some analysts say will be hard to do in regulatory-heavy Latin America.
Competition Set To Push Down Airfares In Latin America
By Amy Guthrie
Dow Jones News Service , August 19, 2004
MEXICO CITY -- Competition is coming to Latin American skies, where air travel is dominated by monopolies and fares are high.
The major U.S. airlines have long looked at Latin America as a high-yield region, where they can get good returns per passenger mile. But now international carriers of various stripes are expanding service in the region, local airlines are consolidating and low-cost carriers are entering to shake things up.
"There is a lot of activity, and it's going to push down prices," said Bob Booth, an aviation consultant with Aviation Management Services in Miami.
The shift is largely due to growing demand for air travel in Latin America and recent global economic growth. Delta Airlines Corp., of Atlanta, Georgia, is heading back into Argentina as that South American country emerges from financial crisis.
And Spain's Iberia SA is eliminating some of its stops in Miami, opting instead for direct service to Guatemala and Panama, and then connections to other parts of Central America. Iberia hopes to spare some of its passengers from long security delays in the U.S. as they make connections in Latin America.
Then there are discount carriers, like Spirit Airlines, of Miramar, Florida, trying to get in on the action. Spirit has been cleared to fly to 11 destinations in Latin America and the Caribbean, while New York-based JetBlue Airways Corp. is servicing popular routes like the Dominican Republic and Puerto Rico.
"We've seen the changes that (low-cost carriers) caused in the U.S. and Europe, and obviously the same will happen when they enter here," said Juan Nozal, vice president of Latin America corporate travel sales for American Express.
According to data from American Express, more than 60% of flight routes in Latin America are operated by a single carrier. There is more choice of carrier on heavily traveled routes, however, so that 60% of passengers regionwide benefit from price competition.
American Express has launched a corporate travel index to help companies compare airfares to different cities in the region. Sending executives from five Latin American cities to Argentina's capital of Buenos Aires for a meeting rather than Santiago, Chile, for example, could save a multinational company close to $600 in airfares, according to data from the index.
"Companies are becoming more and more concerned about costs," Nozal said.
Within the region, domestic and international fares are lowest on a per mile basis in Argentina, Chile and Peru. Brazil, Colombia and Mexico have the highest fares. The American Express index compares prices in 10 countries and Puerto Rico.
In the case of Mexico, the government controls both major domestic carriers, having bailed them out after the 1994 currency devaluation. Plans to privatize the carriers have been stalled since the Sept. 11 terrorist attacks in the U.S.
Competition Set To Push Down Airfares In Latin America
By Amy Guthrie
Dow Jones News Service , August 19, 2004
MEXICO CITY -- Competition is coming to Latin American skies, where air travel is dominated by monopolies and fares are high.
The major U.S. airlines have long looked at Latin America as a high-yield region, where they can get good returns per passenger mile. But now international carriers of various stripes are expanding service in the region, local airlines are consolidating and low-cost carriers are entering to shake things up.
"There is a lot of activity, and it's going to push down prices," said Bob Booth, an aviation consultant with Aviation Management Services in Miami.
The shift is largely due to growing demand for air travel in Latin America and recent global economic growth. Delta Airlines Corp., of Atlanta, Georgia, is heading back into Argentina as that South American country emerges from financial crisis.
And Spain's Iberia SA is eliminating some of its stops in Miami, opting instead for direct service to Guatemala and Panama, and then connections to other parts of Central America. Iberia hopes to spare some of its passengers from long security delays in the U.S. as they make connections in Latin America.
Then there are discount carriers, like Spirit Airlines, of Miramar, Florida, trying to get in on the action. Spirit has been cleared to fly to 11 destinations in Latin America and the Caribbean, while New York-based JetBlue Airways Corp. is servicing popular routes like the Dominican Republic and Puerto Rico.
"We've seen the changes that (low-cost carriers) caused in the U.S. and Europe, and obviously the same will happen when they enter here," said Juan Nozal, vice president of Latin America corporate travel sales for American Express.
According to data from American Express, more than 60% of flight routes in Latin America are operated by a single carrier. There is more choice of carrier on heavily traveled routes, however, so that 60% of passengers regionwide benefit from price competition.
American Express has launched a corporate travel index to help companies compare airfares to different cities in the region. Sending executives from five Latin American cities to Argentina's capital of Buenos Aires for a meeting rather than Santiago, Chile, for example, could save a multinational company close to $600 in airfares, according to data from the index.
"Companies are becoming more and more concerned about costs," Nozal said.
Within the region, domestic and international fares are lowest on a per mile basis in Argentina, Chile and Peru. Brazil, Colombia and Mexico have the highest fares. The American Express index compares prices in 10 countries and Puerto Rico.
In the case of Mexico, the government controls both major domestic carriers, having bailed them out after the 1994 currency devaluation. Plans to privatize the carriers have been stalled since the Sept. 11 terrorist attacks in the U.S.