Business

Aviation

How the Andes just got handy— New York

Preface

While North American airlines continue to bleed cash and cut back on services, down in Latin America the aviation industry has never felt more robust.

South America

14 August 2010

While North American airlines continue to bleed cash and cut back on services, down in Latin America the aviation industry has never felt more robust. Panama’s Copa Airlines has emerged as a regional air-power, Brazil’s TAM is flourishing, and low-costers such as Gol and Azul now offer affordable air travel to the Latin masses.



Still, the most interesting aviation action is taking place in the Andes – where Santiago-based Lan will soon link key tourist destinations not just with North America and Europe, but finally with each other. Indeed, over the next six months, Lan is launching new routes between its main Lima hub and both Chile’s Easter Island and Argentina’s Iguazu Falls, along with daily service between Quito and the Galapagos Islands in Ecuador.



The new flights come at a bullish moment for Lan, which reported a 14.5 per cent increase in passenger numbers last month and recently announced a $4.1bn (€3.1bn) deal for 50 new Airbus A320s for delivery starting in 2012. “We’ve already covered our domestic and long-haul international markets – now it’s time to connect the region,” says Pablo Yunis, Lan’s vice president of North America. 



As Latin America’s largest carrier, Lan is well positioned to support such expansion. Its balance sheet is back in fighting form – with second quarter net income surging to $60.6m (€46.9m) this year compared to $4.2m (€3.2m) in 2009. Lan will also be the first carrier in the Americas to receive the long-delayed Boeing 787 Dreamliner next year – already earmarked for its latest intercontinental route between Lima and San Francisco. Most crucially, with both hubs and well-developed operations in Chile, Peru, Argentina and Ecuador, Lan has the regional reach to handle equally ambitious local rivals.



The most ambitious is clearly Avianca-Taca – the six-month-old company formed by merging Colombia-based Avianca with El Salvador-based Taca. The new carrier – Latin America’s fourth largest – is also eyeing the lucrative Quito-Galapagos route. And with service throughout South and Central America, Avianca-Taca offers a similar route structure as its far larger rival.

Nonetheless, Lan will be a tough carrier to beat, says aviation analyst Robert Booth, chairman of Miami-based consultancy Aviation Management. “Lan is the (regional) ‘model airline’, by far the most successful in Latin America,” Booth notes. “Avianca-Taca will be successful over time,” he adds, “but Lan can handle any and all competition.”

As Lan readies its new routes, the carrier is already preparing for further Latin American growth, with Brazil and links to Cuzco, the gateway to Machu Picchu, on the agenda. “We have three or four new routes in development,” Yunis confirms. “Our goal is to become one of the top 10 airlines in the world,” he notes. “We just need to get more planes.”

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