Photo: Embraer press release
Despite the region’s current headwinds, which stem mainly from political and economic instability, prospects for mid and long-term growth remain positive in the coming years. An economic turnaround is expected, addressing macroeconomic imbalances and restoring business confidence. This recovery will result in more equitable income distribution and deeper regional integration, which will boost demand for air travel.
Over the last five years, the annual growth in demand for air transport in Latin America has consistently been above the world average of about 5%, hovering at 7%. This trend is expected to continue over the next 20 years, when the region will grow around 6% annually.
The growth of the region’s middle class will also create new customers for the airlines, since many people have yet to take their first flight, rendering Latin America ripe for air transport. Comparing the region with a mature air travel market like the U.S. reveals enormous potential for growth: Latin America has 0.4 airline passengers per capita, a figure that is one sixth of the U.S.
Along with the expansion of the middle class, new investments in aviation infrastructure will shape the way air transport will grow in the coming years. The broader reach of air transport beyond major financial and industrial centers to mid-sized cities–with population between one hundred thousand and one million–has caused demand to grow nearly 1.5 times faster than to the largest cities. This growth highlights the need for efficient airline service to new low-and mid-density markets, and higher frequencies in existing markets.
“Fleet optimization is key, as secondary markets are poised to lead the demand for new air travel,” said Simon Newitt, Embraer Vice President, Commercial Aviation, Latin America. “Carriers will continue to acquire new and efficient aircraft to serve low- and mid-density markets and to offer greater network connectivity.”
Consolidation and mergers have also contributed to fundamental changes in the airline industry as a way of leveraging synergies and focusing on sustainable growth and profitability. Yet, some major carriers responded to the capacity/demand mismatch – and financial losses – by cutting routes and reducing capacity in attempting to achieve a more viable business environment.
The first delivery of an E-Jet in Latin America occurred in 2005, when Panama’s Copa Airlines received an E190. Currently, over 200 E-Jets are in service in the region, where Embraer is the leader in the segment of jets up to 130 seats, with 70% of market share. The E-Jets family has logged more than 1,700 orders and over 1,200 deliveries to date. The aircraft are in service with some 70 customers from 50 countries.
In order to meet future demand, Embraer is bringing the E-Jets E2 to the market to complement its current E-Jets offering. The Company recently rolled out the first E190-E2, which will enter service in the first semester of 2018.