Latin America – which is often overshadowed by emerging markets in China and India – is playing a major role in the growth of global air travel. Led by Brazil and Mexico, nearly 50% of total capacity flown by Latin American carriers are controlled by just four full service airline groups – Aeromexico, Avianca, Copa and LATAM. Nevertheless, more low-cost carriers (LCCs) are emerging in countries such as Argentina, Chile and Uruguay, which will increase competition and should lead to better aviation infrastructure for all countries. By 2035, Latin American markets will grow by 3.8%, serving a total of 658 million passengers annually (compared to 345 million today).
While the demand for air travel within Latin America represents massive opportunity on its own, the ability to successfully market to the Asia-Pacific (APAC) region will also be a significant growth driver for Latin American airlines. Investment flowing in the other direction has already started – China has promised $500 billion in trade and $250 billion in direct investment between 2015 and 2019, and Chinese travel and leisure giant HNA Group has invested more than half a billion dollars in Azul, the Brazilian low-cost carrier. If Latin America can continue to build its airline sector domestically and regionally, it stands to grow into a global travel sector powerhouse.
Global Travel and Mobile-First Commerce
Latin America is a sprawling region, comprising South America and overlapping parts of North and Central America; as such, competition varies on a sub-regional basis. The northernmost areas of Latin America are complicated in part by competition from North and Central American carriers. The major routes in South America are dominated by two supercarriers, but with increasing liberalization of air space, there is abundant opportunity for low-cost carriers as well. The continent’s largest market, Brazil, has no dominant airline – at least not yet.
When it comes to smartphones and other mobile devices, Latin America is similar to other emerging markets, on the cusp of significant growth in mobile commerce. By 2021, smartphone penetration in Latin America will increase from 245 million users today to 290 million. According to the UN, one-fourth of Latin America’s total population is between the ages of 15 and 29. Like their counterparts in Asia-Pacific, Latin American Millennials want a seamless travel experience that is cashless, paperless and integrated with loyalty rewards.
The Asia-Pacific – Latin America Corridor
To put Latin American air travel into context, the APAC region had 1.3 billion smartphone users last year, compared to 224 million in Latin America. China owned 40.7% of the APAC region’s digital audience. For airlines in Latin America, reaching markets in Asia-Pacific will require better travel systems that can cater to smartphone users.
Today’s “digital natives” expect to handle any transaction or interaction – or at the very least, booking and payment – via mobile device, whether through an airline’s branded iOS or Android app, or a browser-based Internet booking engine. They also want to be able to pay via their preferred payment method or mobile wallet. The same holds true for business travelers – they want the convenience and efficiency of using a smartphone throughout their journey. With increasing trade between Latin America and Asia-Pacific, mobile devices will also be the “gateway” to ancillary merchandising and travel packaging, but it will require tighter integration of mobile payments into the search and booking process.
CellPoint Mobile can help Latin American airlines implement mobile solutions that can generate higher revenue and make travel easier. CellPoint Mobile’s portfolio of mobile-first solutions can provide the seamless travel experience that today’s travelers are demanding, helping them move through booking, payment and travel management with as little time and effort as possible.
To learn more about the opportunity strong mobile strategies create in LatAm and across global regions, read our Mobile Journey series here.