Latin America & the Caribbean Air Transport Market Overview - PowerPoint PPT Presentation

Latin America & the Caribbean Air Transport Market Overview Aviation Industry Day Brasilia, August 2012

Increasing relevance and potential

x2 GDP growth rate doubled in the last decades Source: IMF

x6 Foreign trade volume multiplied by 6 over the last two decades Source: CEPAL

x11 Foreign direct investment increased 11 times since 1990 Source: CEPAL

Inflation under control 7% inflation rate vs. average rates of over 100% in the 80’s and 90’s Source: IMF

-25% Reduction in poverty rates Source: CEPAL

High Traffic Growth Source: ALTA, IATA, AACO (Middle East), AAPA (Asia-Pacific), AEA (Europe), US DOT (US), CAAC (China) *China: from 2005 to 2010. Asia Pacific: international traffic only

Bullish Long-Term Forecasts * Domestic Source: Boeing

In Perspective LATAM USA Europe Fuente: IMF, US Census Bureau, OAG

Capacity by Country of Departure Others 23% Brazil 36% Panama 2% Peru 5% Chile 5% Colombia 5% Argentina Mexico 16% 8% Source: OAG, 2011 
 *ASK (Available Seat Kilometers)

LCC Penetration Legacy LCC's 53.9% 57.9% Brazil Mexico Source: ANAC Brasil, DGAC Mexico

International Capacity LatAm-USA Traffic LatAm-Europe Traffic Latam Airlines Latam Airlines 20% 23% USA Airlines European Airlines 77% 80% Source: ALTA, AEA, US DOT

The region keeps improving...

...and so does the industry

Younger Fleet Europe USA LATAM ALTA Source: Ascend (jets and turboprops with over 40 seats)

47 Billion Aircraft orders value in 2006-2011 Source: Ascend

LatAm Jet Fleet by Generation 20% 71% 28% 52% 16% 13% Older Mid Newer Source: Boeing

-48% Fewer emissions per passenger km. Source: ALTA airlines

Safety

Constantly Improving Safety North America LATAM ALTA Members Source: IATA. Note: 2011 values estimated assuming no more hull-losses until end of the year

Seamless experience through alliances and consolidation

Alliance Membership In Global Alliances Non-Aligned Source: OAG Note: 2011 figures include announcements that will be made effective in 2012

Consolidation Top 5 Groups Other Carriers Source: OAG

-45% Decrease of average domestic fare in Brazil (adjusted for inflation) Source: ANAC

Will Governments keep pace with Industry’s efforts ?

• Safety • Infrastructure • Competitiveness

Safety Main Issue • Unstabilized approaches and runway excursions

Safety Initiatives • Multi-angle strategy to reduce unstabilized approaches • RASG-PA (ICAO/ANAC/IATA/ALTA) • Best Practices & Information Sharing Programs

Call to Action • Doubling of joint efforts to reduce runway excursions • Adopt new technologies (PBN, etc.) • Promote IOSA as a standard in the region • Information sharing protection • Standardization of phraseology

Infrastructure

USD 4B In fees and charges

66% Not reinvested

> 30% Of flights depart from congested airports

Congested Airports Highly Congested Congested 
 One of every three flights in the region departs from a congested airport

Quality of Air Transport Infrastructure Ranking 2007 Ranking 2011 Argentina 84 115 Brazil 57 93 Colombia 53 89 Costa Rica 68 80 Ecuador 71 73 El Salvador 25 33 Mexico 55 65 Source: World Economic Forum

Call to Action • Reinvest in infrastructure for the industry • Don’t use airport privatizations as cash cows...but as great opportunities to improve efficiencies • Promote integration of ATC in the region

Competitiveness

-43% Decrease of airline unit costs in real terms since 1980 Source: ICAO

5.4 million Jobs generated by the industry in the region Fuente: ATAG, 2012

USD 125B Contribution to the region’s GDP Fuente: ATAG, 2012

Unreasonably High Fuel Costs Source: ALTA

USD 1,000,000 Per aircraft operating the Sao Paulo-Rio de Janeiro route Source: ALTA

High Airport Charges, Monopolistic Earnings Source: Annual Reports (2009)

Restrictions on Foreign Capital Airlines Other industries Establish ✘ ✔ subsidiaries in other counties Sell controlling ✘ ✔ stake to nationals of other countries

Call to Action • Regulate your natural monopolies so they're efficient, not to harvest the most money from them at the expense of your own economies • Eliminate restrictions to foreign capital • Do not tax us as if were a vice or luxury item instead of an engine of development

Conclusions • Air transport is an engine of development • Highly competitive industry with reduced margins • Requirements of significant long-term investments

Conclusions • Airlines cost structures affected by regulatory aspects and monopolist/ oligopolist providers • Need to work together to improve competitiveness to ensure healthy development of the industry

Thank you