JetSmart, LATAM See ULCC Potential In South America

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BOGOTA—Two Latin American airlines, one a legacy mainline carrier and the other a young ULCC, have each weighed in on the potential for and value of lower cost models in the region.

The remarks come after Colombia’s two ULCCs—Ultra Air and Viva—ceased operations in 2023. Avianca and LATAM Airlines Colombia, the country’s first and second largest operators, moved quickly to fill that void, and just two weeks into March, Santiago de Chile-based JetSmart reintroduced ULCC fares in the market—with more, it says, to come.

“We are at a very critical part of history in South America,” JetSmart CEO Estuardo Ortiz said at Aviation Week Network’s Routes Americas in Bogota.

Ortiz described JetSmart’s ambitions to enter Colombia as dating back to 2022, focused on stimulating a price-sensitive South American market rather than on market share.

“I think it’s a dangerous game in aviation, looking at market share,” he said. ULCCs have a larger role to play, he suggested, in convincing local governments of the value of aviation, and by lowering taxes—which he described as one of its biggest obstacles.

“I think quite humbly JetSmart can play a factor,” he said, pointing to Brazil and Chile as being two examples of where a ULCC’s contribution to passenger volumes have encouraged a change in fees and taxes. Brazil “has reduced the airport fees substantially,” he said, referring to it as a “mindset change.”

In Chile, “since our start in 2017, we have shown the government ‘look, the market has grown—back in those days—28% in two years, and it has grown 7% in the previous seven years,’” the CEO related. “So it was quite dramatic, and they did reduce the fees by 35%.”

While LATAM Group CEO Roberto Alvo also noted the value of ULCCs, lower-cost carriers as a whole in South America don’t have some of the same particularities that allow their counterparts in other regions to grow, he said.

“I think that low-cost-carriers have a space in aviation in South America,” Alvo said. “I think it is healthy for us to have those types of competitors and I think it helps the democratizing of aviation.” But growth of ULCCs he sees as “relatively limited,” noting, “there’s a number of things that aren’t necessarily the same as conditions in Europe.”

“I see growth as an important role of ULCCs in the region,” Alvo added. “But I think the conditions of the region—which are not necessarily infrastructure only but also demographic—will constrain that growth in the upcoming years. But for now, I think that they have done a good job ... forcing us to be better.”

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Source link : https://aviationweek.com/air-transport/airlines-lessors/jetsmart-latam-see-ulcc-potential-south-america Author : Publish date : 2024-03-19 03:00:00 Copyright for syndicated content belongs to the linked Source .