Latin America’s new deliveries will outpace worldwide growth

Today, Boeing released its latest Commercial Market Outlook (CMO). The OEM expects that, until 2040, there will be 43,610 new deliveries worth US$7.2 trillion globally, with an annual 3.1% fleet growth. Meanwhile, Latin America’s new deliveries will outpace worldwide growth. Latin America’s new deliveries: what’s expected? According to Boeing, traffic growth for Latin America’s airlines is forecast to average a 4.8% growth per year. The markets across the region have untapped potential due to the lack of point-to-point connectivity across most of the subcontinent. Boeing currently expects there will be 2,530 deliveries of commercial new aircraft in the region. Nevertheless, despite the growth both in terms of yearly passengers and fleet, Boeing is reducing its forecast of new planes coming into the area compared to 2020. Last year, Boeing’s CMO stated that there would be 2,610 new aircraft deliveries in the region, primarily single-aisle units. The decrease in new deliveries came despite Boeing’s forecast of faster GDP growth in the region, going from 2.2% to 2.4% in 2021. [caption id="attachment_57534" align="aligncenter" width="580"] Latin America’s new deliveries. Photo: Boeing.[/caption] Where are the growth opportunities in Latin America? The continent has untapped potential. This offers the possibility of higher growth as the use of air transport catches up to global air service levels, said Boeing. This process is already underway in countries like Brazil and Mexico. In these two nations, low-cost carriers have improved the connectivity on point-to-point routes. Moreover, they’re competing to take away the bus lines’ traffic, and we could make an argument that they’re winning. Boeing said, “Given the continent’s expanse and geographical features, and relative lack of short-haul and low-cost service, large opportunities remain. South America’s short-haul markets have not yet reached their full potential, as evidenced by the many South Americans still electing to make intercity journeys with a lengthy bus trip rather than a short flight.” Boeing also sees an area of opportunity in the long-haul markets. Currently, the service to North America and Europe remains dominated by carriers from those regions. Therefore, Latin American airlines could have a chance to grow through market share gains. Nevertheless, Boeing is not expecting many widebodies to go to the Latin American region. In 2020, Boeing expected only 220 widebody deliveries in the area. The OEM added, “Service to Europe also remains unusually concentrated on a city-pair level, with flights from Madrid and Lisbon accounting for almost half of all seats. Airline routes to secondary European cities are almost nonexistent, and if offered, could unlock significant tourism potential through traffic stimulation.” Boeing’s long road ahead in Latin America Currently, Airbus has the upper hand in Latin America. The European OEM has approximately 60% of the commercial airplanes market share in the region. Moreover, it has some important contracts going forward with carriers like LATAM, Volaris, Viva Aerobus, Viva Colombia, Sky Airline, and JetSmart. According to Airbus’s O&D, there have been orders for 1,129 aircraft in Latin America, and the company has delivered 675 so far. Meanwhile, Boeing has 175 unfilled orders in Latin America with customers like Aerolíneas Argentinas, Aeromexico, Avianca, Copa Airlines, GOL, and LATAM Airlines Group. In the next couple of decades, Boeing has to push forward into the Latin American market. Airbus has a stronghold with the A320 family in the region, mainly with low-cost operators. Instead, Boeing only has 20+ unfilled orders with GOL and Copa Airlines. The Brazilian carrier is Boeing’s primary customer in the region.

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