A bright future
The region's economy is projected to grow strongly over the next 20 years, spurring Latin American air traffic growth to exceed the world average. Traffic within the region is expected to grow at a rapid pace, most quickly within South America, where growth will average 7.0 percent per year. By 2030, South America will have the sixth largest internal traffic flow among the regions covered in the Current Market Outlook. Total traffic carried by Latin American airlines will grow 6.9 percent annually.
Business developments
Air travel is assuming an increasingly important role in the region's commerce as travelers switch from roads to air transportation. Rising prosperity is also creating demand for international travel. More citizens can afford to travel outside the region and more businesses seek wider economic bonds. In addition, the upcoming Olympic Games and World Cup will require a growth in airline fleets and infrastructure in South America. The region has a large number of new jets on order to meet this escalating demand, with network carriers and low-cost carriers placing 187 orders in 2010.
Airlines have been consolidating to expand their businesses across the region. During 2010, Avianca and TACA completed their merger, and LAN and TAM announced their merger into LATAM. Opportunities may exist for further consolidation in the region over the next 20 years. These more competitive airlines will allow Latin America to have a more substantial stake in the airline market. Today, Latin American airlines account for 48 percent of the traffic to, from, or within Latin America. By 2030, that number will grow to 61 percent.
Growing fleet
Projected GDP growth of 4.2 percent per year over the next 20 years will help drive the commercial fleet to grow 5.6 percent annually. By 2030, the fleet will consist of 3,390 airplanes. Most of the fleet delivered over the next 20 years will be new single-aisle airplanes for travel within the region. About 360 twin-aisle and larger airplanes will be used for connections with the rest of the world as international commerce increases. By increasing the size of the twin-aisle fleet and using new, efficient airplanes such as the 787, airlines in Latin America will be able to serve new city pairs and give passengers more convenient routes.
