Latin America's airlines see steady business
as global numbers recover

By Rachel Hatzinapagos

Following a strong rebound in 2004, global airline passenger traffic measured in passenger-kilometers performed is expected to expand, narrowly outpacing Latin America for the next few years. Yet airlines and airports in the region see a fluke in the numbers: They say that since the region was relatively unscathed by the chilling effect of terror on air travel, slower growth isn't surprising. In fact, it's just about right.

Passenger-traffic growth for 2005 will be 6.2% for the region, compared to 7.6% for the world total, according to the International Civil Aviation Organization. In 2004, global growth was double the Latin American clip, at 14% in 2004. The region will continue to trail the world through 2007.

The major reason for moderate growth in Latin America's air sector is political and economic instability, says Chaouki Mustapha, an economist for the International Civil Aviation Organization. Over the past decade, passenger growth has been directly tied to economic performance. ``Those regions were heavily affected by the crisis in Argentina and Brazil. That was the reason for the modest growth,'' he says. ``We don't expect this to be repeated, but we expect this to continue in the medium-term forecast.''

In the long term, Mustapha estimates, growth will remain flat, although higher on average than in past years. Low-cost carriers, he says, are not likely to have a large impact on Latin American air travel. Generally, cheaper seats does not equal more travelers. ``In Europe, we saw a similar situation with new low-cost airlines and the share of the overall traffic isn't very significant,'' Mustapha says.

Despite this prognosis, airlines and airports in the region disagree. Passenger traffic to and from Latin America has seen about the same growth as other regions, according to officials at Miami International Airport (MIA). Latin Americans account for 46% of their total international passengers. ``Latin America comprises the largest amount of our international traffic and MIA continues to lead the world as a gateway to the Americas,'' says Greg Chin, media relations coordinator for the airport. ``I think the numbers show that it hasn't made much of a difference.''

American Airlines, the largest airline serving the region, also sees no loss despite the slower growth figures forecast by the industry. In July 2005, American Airlines reported that revenue passenger miles to and from Latin America increased 12.5% from the previous year. International traffic for the airline increased 11.5%. ``We established our presence in Latin America 15 years ago. While we have started new flights to parts of the region, generally we find that we have a strong presence in those markets already,'' says Martha Pantin, spokesperson for American Airlines. ``It's not that they've shrunk. It's that it's already been established.''

Christy Rodgers, senior director of Latin American sales for Continental Airlines, says one reason for the apparent slump is that the impact of the 2001 terrorist attacks in the United States were not felt as much in the Latin American economy. As a result, Latin America did not have to deal with the decline in air travel, nor did it see the subsequent recovery. ``I don't think Sept. 11 had nearly as much of an impact on Latin American travel as other countries partially because they didn't see themselves as targets,'' Rodgers says.

Homeward. Travel from the United States by Latin Americans, meanwhile, has strong potential for growth. ``As they continue to migrate to the U.S., there will always be a need to visit relatives. There's another area we are seeing a huge growth, in the Hispanic population in the U.S.,'' Rodgers says. ``There is a huge growth in leisure travel and we are hoping they will go back home and visit their roots.'' In July 2005, revenue-passenger miles for Continental in Latin American travel increased 3.5% from the previous year. Meanwhile, international traffic increased 12% and transatlantic travel increased 13.8%.

Source: Latin Trade Magazine