Latin American Political Instability Heralds Fresh Challenges for the Airline and MRO Sectors, Says Alton
Latin America’s political instability, already impacting the region’s airline and MRO industries, may create greater challenges if it causes air passenger demand to fall, says Alton Aviation Consultancy.
Speaking at the MRO Latin America conference and exhibition in Cartagena, Colombia, Jonathan Berger, managing director at Alton, said: “This year is likely to see continued political strife in Latin America, which made 2019 a difficult environment for aviation. Governmental changes and civil protests, such as Chile’s ’30 Pesos Revolution’, contributed to steep currency declines versus the strong dollar. As a result, US-denominated MRO services became more expensive locally, hurting airlines’ bottom lines.
“Last year, the industry had to adjust to the failure of several Latin American airlines and the restructuring of Avianca. Should ongoing political uncertainly further impact passenger volumes, MRO activity would be an indirect victim of airlines reducing flight frequencies. This is certainly one of the issues that should be top of mind for MRO leaders today.”
Notwithstanding these near-term challenges, Alton predicts healthy growth for Latin American MRO over the coming decade. The consultancy’s latest industry forecast sees MRO spend in Latin America growing by 7 percent CAGR over the decade, from US$5bn in 2020 to US$9bn 2030. Globally, the consultancy forecasts MRO spend rising by 6.3 percent CAGR, from US$88bn in 2020 to US$161bn by 2030.
Berger comments: “Latin American MROs will benefit from the long-term worldwide growth in aviation, with Alton forecasting the region’s fleet to grow by 700 aircraft by 2030 to a total of 3,000. However, MRO businesses must stay mindful of the potential impact of national and regional political factors as they plan their development.”
As part of his address to conference delegates, Berger presented Alton’s ‘Annual Top 10 List for the Latin America MRO Market’. Alongside developments such as Delta Air Lines’ new partnership with LATAM and GOL’s entry into the MRO sector via GOL Aerotech, Berger highlighted the continued improvements in on-time performance with Copa and LATAM leading the world in dispatch reliability in their respective airline size categories.
