In Latin American aviation, one company has been able to fly above the rest, despite major industry setbacks, an uncertain economy, and across-the-board losses by its competition. That airline, or better yet, airline group, is called Latam, a conglomeration of two of Latin America’s biggest carriers, LAN (Chile) and TAM (Brazil). Previous to their merger, LAN was ranked #095, and TAM #078 respectively on the Latin Target-500 list. The two companies merged in late 2011, making them the largest airline group on the continent. Since then, the multilatina improved their fleet, battled the Boeing Dreamliner debacle, and restructured their management strategy, all the while growing their market share on the continent.

Currently, Latam controls 46% of the air transport capacity between all Latin American countries. This statistic is huge, considering that the region’s overall aviation growth has exceeded 30% over the past five years. Latam also owns a fleet with an average age of less than seven years, which lowers overall fuel consumption, and has greatly reduced potential maintenance costs. They are, however, feeling some turbulence after the merger. And if you look at their earnings numbers straight out, it may not appear that they are as far ahead of the game as one may think. Those numbers, though real, can be deceiving when looking at the strategic benefits of the merger, as well as their future potential for market dominance.

With a new management focus in place, the company plans on becoming more adaptive, to keep them from the pitfalls of things like high fuel costs, route changes, and international regulations. One of Latam’s biggest strategic advantages is having local airlines that participate in something known as “the cabotage market”. The cabotage market, put simply, refers to allowing these local airlines to fly domestic routes in other countries. This has allowed the company to focus their priorities to transporting passengers who fly internationally from non-capital cities.

Copa Airlines, ranked #272 on the Latin Target-500, appears to be adopting similar strategies, and has so far seen positive results as well.

According to an industry source in aviation, “Latam has been very successful in segmenting their clientele, in a way where each one pays according to their capacity, allowing more people to have access to more economical rates, which become viable since other people pay more.” And by all accounts, that strategy seems to be working.

While Latam’s profits have taken a drastic dive in recent months, they are still maintaining a strong presence in an industry where many other players seem to be failing. Other Latin American carriers, such as Gol, have lost up to USD $500 million since last year. Others, like Spain’s Iberia, who operates many flights out of the region, have had to cut routes, reduce flight volume, and lay off thousands of employees just to survive. At its current rate, Iberia is reportedly losing around USD $1.7 million per day.

For Latam, the path to success may not be a simple one, but it is clear: Keep consumer pricing low, maximize route frequencies, and continue to adapt to the growing industry setbacks. If they can do this, they will have a clear shot at dominating the regional market, as well as expanding their services into new territory for the future.

To find out more about Latam, and for direct access to decision makers in both aviation, and a number of other industries, give Latin Target a try today.

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