In My Perspective
Low Cost Carriers Discover New Passengers, Profits
Over the past few years, I have been following with growing interest the rise and triumph of low-cost carriers in Latin America. Airlines like Interjet, Volaris and Viva Aerobus in Mexico and Gol, Azul and Webjet in Brazil, are giving their legacy counterparts stiff competition in high volume markets constantly seeking alternatives in travel.
I don’t think too many people thought the LCC model would work in our region. Not even 10 years ago, flying was for the elite and practically unthinkable to a huge part of the population. Today, a third of the market is opting to fly over riding a bus or train. And why not? The cost is often comparable, allowing travelers to reach their destinations faster and in modern aircraft designed for efficiency and comfort.
Last year, figures showed that LCC passengers jumped nearly 16 percent worldwide to reach 640 million and passenger load factors grew nearly three points to reach 80 percent. All this while making money - - operating profits more than doubled to surpass $4 billion over the previous year.*
And fuel-efficiency can make an even greater difference. The A320neo for example, could represent a saving of 15 percent or more in fuel burn or $10 million NPV over 15 years, and that’s just for one aircraft. Imagine the savings for a fleet of hundreds.
I look forward to seeing this growing trend grow further. Soon we will see new players emerge throughout the region, and we could see even more of them sooner with further deregulation, lower taxes and airport tariffs.
* May 2011 Airline Business’ Interactive edition on LLC
With more than 30 years in the aviation industry, Rafael Alonso is the Senior Vice President of Airbus Customer Affairs for the Latin America and the Caribbean region, responsible for all Airbus commercial activities and customer relations in more than 40 countries.
LCCs extraordinary growth between 2001 and 2010.