2017: PERSPECTIVES FOR AVIATION

February 18, 2017 0 Comments

I. INTRODUCTION

The debut of 2017 has been not only turbulent but also cumbersome.
Weak indicators for global economic activity, appreciation of the US dollar, fast-paced electoral processes in various nations, entrenched protectionist policies in many countries, and the turbulence generated by the advent of Donald Trump's presidency in the United States, propel uncertain scenarios for aviation in the world.
Bufete Lan, a law firm specialized in aeronautical law, among other areas, analyzes the prospects for aviation in 2017 for its clients and friends.

II. BACKGROUND

In general, 2015 and 2016 have been fruitful years for international commercial aviation.
The International Air Transport Association (IATA) has reported positive figures for Asia, the United States and Europe.
However, this has not been the case for Latin America. In 2015 and 2016 it had the worst results at the international level, the main cause being the weak and declining economic activity, highlighting, for example, the cases of Brazil and Mexico.
In addition to the slowdown in economic activity and the appreciation of the US dollar, the slow but steady increase in oil prices has also contributed to the shaky aeronautical activity in Latin America.
Notwithstanding the foregoing, IATA continues to anticipate strong long-term growth for this region of the globe, specifically with passenger doubling over the next few years.

III. COMMERCIAL AVIATION

Overall, 2017 is a difficult year.
For example, there is a declining demand for wide-body aircraft such as the Boeing 777 and 787, without ruling out that the legendary Boeing 747 is no longer produced and Airbus 380 orders have been paralyzed.

IATA has forecast that airlines' net profits will decline by 16% in 2017. Boeing also plans to cut 8% of its workforce.
In Latin America, the prospects are not rosy either, although the low-cost airline sector continues to consolidate.
Based on growing open skies policies, low-cost airlines are multiplying in the various nations, benefiting also from a greater number of mergers and consolidations. (El País, "Las aerolíneas low cost agitan Latinoamérica”, January 22,
2017).
Especially LATAM stands out, derived from the merger of the Chilean LAN and TAM of Brazil, constituting the largest airline of the region.
Mexico continues to add low-cost airlines, notably Viva Aerobus and Volaris, with Interjet as a hybrid case between traditional and low-cost airlines.
Argentina is promoting the emergence of this type of airlines, as is the case in other nations of the American subcontinent.
However, according to the Madrid newspaper "El País", there
are only four truly low-cost companies: Azul (Brazil), Volaris (Mexico), Viva Aerobús (Mexico) and Viva Colombia.
However, growth rates are impressive; between 2011 and 2016 the low-cost airlines have taken 53% of the growth of the commercial activity in Latin America. (El País, ibid. P.3)
On the other hand and as mentioned, in addition to the growth of low-cost airlines, in Latin America there is also a gradual increase of alliances and consolidations, notably Aeromexico with Delta and the aforementioned LAN and TAM.
Lastly, it should be mentioned that, in the case of Mexico, 2017 is expected to be a year of weak growth, with a likely slowdown of 6.2% over 2016. (La Jornada, “Se desacelerará tráfico de pasajeros”, January 25, 2017).

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