Brazil is Latin America's growth driver for long haul flights by European airlines

10 May 2018 Consultancy.lat

Whilst the Latin American airspace is experiencing high levels of single figure growth, Brazil has above average growth of 14% in both incoming and outgoing international passengers. The country is on the verge of signing an ‘open skies’ accord with the US and has recently posted economic progress, spurring on European airlines to increase trans-Atlantic flights. 

Intercontinental flights between Europe and Latin America are set to increase as European airlines aim to capitalize on both growing domestic and tourism markets. In 2017, trans-Atlantic flights experienced 9.3% growth and according to ForwardKeys consultancy, those numbers will continue to rise another 9% in the first half of this year. 

Air travel between Latin America and Europe continues to grow with 2017 being the biggest increase in passenger numbers since 2011. Brazil is the leading target for airliners who seek to grow their presence on the flight route, aiming to capture growth in both inbound and outbound travellers. 

According to a recent report by ForwardKeys consultancy, a travel and big data analyst consultancy firm, whilst Argentina feeds regional travel, Brazilians are travelling long haul (outside of Latin America and the Caribbean). International departures from Brazil have increased 14.2% this year to June in comparison to the same dates last year. For Argentina, that number is 16.6%. 

ForwardKeys is a consultancy firm which uses big data to predict the future of travel worldwide. The firm analyses over 17 million booking transactions per day and uses the data to monitor and anticipate traveller trends and markets opportunities.

The analysis is titled ‘Latin America Travel Outlook: First half of 2018 travel outlook’ and is based on Air Reservation Data property of ForwardKeys as of 8th April 2018. The database contains more than 200,000 online and offline reservations from travel agencies around the globe.

Argentina leads the outbound travel growth in latin america

Air capacity for long haul international flights to and from Brazil rose by 14% over the same time period. Brazil is already experiencing a rise in European airline services with some companies increasing their presence in the region by up to 40%. This includes airlines such as: Azul, Iberia, Air France-KLM, Air Europa, Turkish Airlines as well as several low cost carriers. 

International arrivals into Latin America have risen 1.9% in the past half year compared to January to June 2017. However, for Brazil this number soared by 16.5% – making it the most desired destination in Latin America. The country last year received roughly 6 million international tourists which, in comparison to Mexico which received upwards of 30 million, still has huge growth potential. Colombia and Peru are also hot destinations this year, with 14.1% and 10.1% growth respectively. 

The substantial increase in travellers from Brazil to Europe does not come as a surprise amid improving domestic economic conditions, but the United States is still the number one destination. For every route connecting Latin America with Europe, there are three times as many connecting flights to North America. That number is nearly five times as high when taking into account only new flight routes which opened in the past 12 months. 

Inbound travel: south american destinations fuel growth led by brazil

Latin American travel environment

Latin America as a whole is a spider’s web of under-serviced flight corridors, with a lack of budget airlines and poor international connections. Whilst this problem is resolving itself with the introduction of airlines such as VivaAir, Spirit Airlines and Azul Brazilian Airlines, European airlines including KLM and Norwegian see expansion possibilities. 

"The trend in flight bookings both to and from Latin America is incredibly healthy," said Olivier Jager, president of ForwardKeys & author of the report, “there is something of a virtuous circle right now. Many airlines are increasing capacity and as that capacity is being filled, airlines are encouraged to further increase the number of seats they provide." 

Many companies who are intending to increase flying from Europe to Latin America are focusing on servicing secondary routes through non-congested airports. For example, Air France-KLM released this week a new corridor from Amsterdam and Paris to the North-Western Brazilian city of Fortaleza. Fortaleza is a city with many internal connecting flights from GOL airline, making the new route a potentially profitable tourist attraction. 

Pieter Elbers, President and CEO of KLM commented on the new route: “Brazil is an important focus market for KLM. The addition of Fortaleza to our network, KLM’s third Brazilian destination, opens up new air routes between major cities in the north and northeast of Brazil. KLM’s partnership with the Brazilian airline GOL creates a new strategic hub, which firmly links Amsterdam and South America.

Both Colombia and Chile have experienced double digit growth for international departures as well as experienced a sustained interest by Latin travellers. 

Colombia, brazil & chile, trendiest destinations

Norwegian Air expands into Latin America

Norwegian is also increasing its long haul flights out of London’s Gatwick airport to Latin America. The company’s first flight to Latin America arrived in Buenos Aires in February 2018 and Norwegian is eyeing off a rapid expansion across the country.

“We have big plans for Argentina. It’s going to be very interesting to see the onward connections we can offer from a Buenos Aires hub. South America is under-served,” said Norwegian’s chief executive Bjørn Kjos. 

Kjos said that Norwegian are only able to fly the route with newer aircrafts. “I can’t understand how other airlines can do [South American routes] with older aircraft. You burn a hell of a lot of fuel.” The uptake of the route between Europe and Latin America is likely to become more feasible with newer aviation technology as well as increased and sustained demand.

Brazilian airline Gol teams up with KLM-BCG partnership

15 April 2019 Consultancy.lat

As part of its strategy to digitize its internal operations, Brazilian airline Gol has teamed up with Dutch national carrier KLM and management consulting firm Boston Consulting Group (BCG).

In June last year, KLM and BCG revealed that they had developed an offering that helps airlines leverage technology to streamline their operations “in an unprecedented manner”. The two companies have been working together for over a decade now across KLM’s business, in recent years also focusing on enhancing internal operations through emerging technologies.

Among the projects deployed successfully to date are using internet of things (IoT) and artificial intelligence (AI) to improve Maintenance Repair & Overhaul (MRO) delivery, utilizing digitization to bolster back-office processes (crew resourcing, ground services, supply chain, etc) and using AI to optimize inter-airline network planning with Sky Team partners such as Air France (Frane), Aeroflot (Russia), Delta (US) and Middle East Airlines (Lebanon). 

Flyers, meanwhile, are reaping the benefits of this back-office digitization. Baggage delays – which often have a domino effect and create major headaches for thousands of passengers – have been reduced, flight transfer routing has been optimized for cross-border passengers and information provided has been personalized and tailored to individual customer experience journeys using digital channels. 

Having deployed the offering – branded as ‘Digital Airline Operations’ – successfully within KLM, the airline and consulting firm last year formally launched their offering externally. “Sinds doing so at the IATA-conference we have received positive reactions on our proposition from all corners of the globe,” said René de Groot, chief operating officer at the Dutch carrier company.Brazilian airline Gol teams up with KLM-BCG partnership

Brazil’s Gol has now become the first Latin American client of KLM and BCG’s joint venture. Commenting on the decision, Gol chief operating officer Celso Ferrer said, “We are delighted that we can work together on ‘Digital Airline Operations’. This will allow us to improve our on time delivery to our customers, while keeping our cost per available seat mile among the lowest in the industry. KLM and BCG have developed solutions in the field of advanced artificial intelligence and optimization that we can adjust entirely to meet our specifics. All in all, it will enable Gol to develop a strong competitive advantage.” 

With a fleet size of around 130, Gol is Brazil’s largest international airline, ahead of local rival Azul, and one of South America’s largest players. The airline carries more than 33 million passengers annually and operates 750 flights daily to 73 destinations in Brazil and in South America, the Caribbean and the United States. In comparison, KLM has a fleet size of around 160 aircraft, carrying more than 40 million passengers. The firm is however part of the Air France-KLM Group, which has a total fleet size of over 500 aircraft. 

“Based on artificial intelligence, machine learning and advanced analytics, we help airlines grow, accelerate innovation and streamline operations,” said Nicolas Boutin, head of the global Airline practice of Boston Consulting Group. 

Asked how the KLM-BCG offering differentiates itself from the many digital-led solutions in the marketplace, Dirk-Maarten Molenaar, a partner at BCG said: “We distinguish ourselves from standard IT suppliers by our focus on integrated planning & management, data-driven decision-making in the event of disruptions, the use of our tools by frontline teams and the development of internal digital functions to help improve services.”

Related: KLM partners with BCG to bring artificial intelligence to the skies.