The low-cost revolution has been slowly taking over the world. Starting in America with Herb Kelleher‘s Southwest Airlines it expanded to Europe as the EU liberalised the air market over that continent. The first to really appreciate the significance of this move were, arguably, Ryanair and EasyJet. Together these two airlines devastated the business model of the traditional flag carriers and introduced flying to millions for whom it had been out of reach. Ryanair is now, by one measure, the largest airline in Europe and various managers from the company went on to help launch the new generation of low-cost carriers in Asia.
While extra complexity in the region (compared to the two single-market environments of the US and Europe) makes life more difficult for these airlines they have still transformed travel within the area, particularly within the two big markets of Malaysia and India.
Now there are low-cost carriers trying to tie together individual transatlantic markets. But one area has remained relatively immune from the low-cost fever; South America. Will this change in 2017?
At the moment Brazil, Mexico and Colombia are the only countries in the region with established low-cost airlines. But the extra red-tape involved in flying between countries means that they run mostly domestic flights. And even these are at higher prices than in Europe.
Its this extra regulation that has led to the higher prices and lower number of flights. Despite the importance of tourism to the region there has been no movement on reducing prices. But even without movement on regulation there may be changes afoot on routes and pricing.
A low-cost company called Flybondi is set to launch soon in Argentina with a dozen domestic routes. This is financed by the founder of Swiss low-cost airline FlyBaboo.
Another company, Viva (one whose primary shareholders is Irelandia Aviation, the investment firm of Ryanair co-founder Declan Ryan) has just launched a new subsidiary, Viva Air Peru. This joins sister airlines in Mexico (VivaAerobus) and Colombia (VivaColombia) .
These are not the only straws in the wind and Boeing is betting passenger numbers in the region will grow by 5.8 percent in the next two decades, said its president for Latin America, Donna Hrinak.
“The majority of these deliveries are expected to be in the single-class segment, reflecting the continued growth of low-cost carriers,” she said.
The one thing each of these expansions have though is that they are focused on single countries. Of course these are countries with large land-masses and populations so the benefits of low-cost flying can still be felt by millions. But cheap cross-border flights are still likely to remain elusive until the regions governments take a decision to ease regulations.