Chilean airline LAN has just started Dreamliner services on the Santiago-Sydney route which stops in Auckland.
Chilean airline LAN has just started Dreamliner services on the Santiago-Sydney route which stops in Auckland.
Chilean airline LAN is optimistic about growth prospects at home and in its biggest market downunder, Australia, despite sluggish economic conditions in both places.
The airline has just started Dreamliner services on the Santiago-Sydney route which stops in Auckland. As as part of expansion will put on a biggerplane towards the end of the year.
This growth comes as it beds down a merger with Brazilian airline TAM to create the biggest airline group in South America with a fleet expansion programme underway that will result in the wider LATAM group owning 28 Dreamliners.
Patricio Aylwin, managing director Asia Pacific for LATAM said economies throughout South America were not as strong as they were two or three years ago.
However, activity around the merger - which started two and a half years ago - was continuing and cost savings of up to US$700 million a year were being found.
These included standardising the fleet and restructuring back office roles although there hadn't been wide scale layoffs among the combined workforce of around 50,000.
"Its working out well, it never stops at one point as the businesses have to to be integrated," said Aylwin.
Latest research from the CAPA centre for aviation shows spluttering growth in Latin America had dented demand and profitability of its previously buoyant airline sector. But Latin America remains an important emerging market and the medium-term outlook is bright.
LAN Business class.
"Economic growth in Latin America should start to recover in 2015. More favourable conditions across most of the main Latin American markets along with lower fuel prices and a relatively disciplined approach to capacity should result in improvements to the bottom line."
The region's GDP grew by slightly more than 1 per cent in 2014, but is expected to expand by more than 2 per cent in 2015.
Brazil, which is by far the largest country in Latin America and has the world's fourth largest domestic aviation market, is expecting economic growth of 1.4 per cent in 2015 after growth of only about 0.3 per cent last year.
LAN Economy class.
Chile is also expected to see a rebound, with projected GDP growth of 3.3 per cent this year after slowing to about 2 per cent in 2014.
CAPA describes the consolidations in Latin America's full service airline sector as "dramatic" but had so far hurt LAN.
"LAN was consistently and highly profitable prior to the merger while LATAM has been unprofitable for three consecutive years," CAPA said.
Aylwin said the Australian economy was soft but this had not affected travel on LAN, where up to 75 per cent of passengers on the Sydney-Auckland-Santiago route originate.
"The Australian outbound market is not related to the economy, it's growing two to three per cent a year," he said.
The New Zealand market was "small but growing," he said.
