Outbreak: LCCs are propagating throughout Latin America. But can they succeed?
Latin America is no stranger to low-cost airlines. In Brazil, Gol pioneered the concept nearly 20 years ago. In Mexico, Volaris, Interjet and VivaAerobus are all more than 10 years old. But what’s happening today is unique: a fiery outbreak of LCC activity up and down the vast region, from the U.S. border all the way to Patagonia.
It’s on that U.S.-Mexican border, in fact, where LCCs led by Volaris have turned Tijuana into one of Latin America’s fastest growing markets. Volaris now operates a subsidiary in Costa Rica too, challenging Avianca and Copa in Central America. Responding to the rise of VivaColombia, Copa started an LCC of its own called Wingo. That same Viva Group, although no longer involved with VivaAerobus in Mexico, brought its Ryanair-inspired business model to Perú last year. Gol isn’t growing much in the troubled Brazilian market. But it’s joining another large and increasingly profitable LCC— JetBlue-inspired Azul— in reasserting itself on U.S. routes. Azul itself is now armed with widebodies flying all the way to Portugal. It’s also starting to enter international markets within South America, connecting Brazil with Uruguay, Argentina and even French Guyana.
The story hardly ends there. Chile’s Sky Airline, although around since 2002, adopted more of a true LCC business model in 2015—former Spirit CEO Ben Baldanza recently joined its board of directors. In 2017, an ambitious new Chilean LCC called JetSmart appeared, backed by the same Indigo Partners investment group behind Volaris, not to mention Wizz Air, Frontier and previously Spirit. And then there’s Argentina, whose LCC bonanza is getting the most attention of all. Flybondi, an independent newcomer, is already flying. So is an airline called Andes, flying since 2006 but just now stepping on the growth pedal in response to Argentina’s big-bang move to deregulate its airline sector—Andes recently launched its first international route, from Buenos Aires AEP to the beach resort Punta del Este in neighboring Uruguay.
And then there’s Norwegian. Despite an increasingly precarious financial situation, the Scandinavian LCC is diving head first into the deregulated Argentine market, hoping to take advantage of the southern hemisphere’s reverse seasonality to balance demand throughout the year.
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