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Latin America Aviation Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 82 Pages
  • August 2022
  • Region: Latin America
  • Mordor Intelligence
  • ID: 4534343
The Latin American aviation market is expected to grow at a CAGR of over 5% during the forecast period (2022 - 2027).

The outbreak of COVID-19 had a major impact on the aviation industry in Latin America, as the demand for air travel dropped and airlines were forced to cut down their capacity in 2020 and 2021. However, the demand for domestic travel and cargo movements and the growth of low-cost carriers in the region are acting as major drivers for the revival of the aviation market in Latin America. Also, the lessened travel restrictions have led to a rebound in passenger flows within the region and to North America, which, in turn, has helped the passenger traffic recovery in the region. According to IATA, the 2019 passenger numbers are forecast to be surpassed in 2023 for Central America (102%), followed by South America in 2024 (103%) and the Caribbean in 2025 (101%).

Despite the slow-growing economy of the region and the economic impact of the COVID-19 pandemic, countries in Latin America are planning to modernize their military aircraft fleet to strengthen their armed forces. This is expected to drive the military aviation sector in the country during the forecast period.

The privatization of airports in countries like Brazil, Jamaica, Honduras, Paraguay, and Peru, is expected to develop the airport infrastructure and enhance capacity, thereby supporting the growth of the general aviation market in the region.

Key Market Trends

Commercial Aircraft Segment to Witness the Highest CAGR During the Forecast Period

The commercial segment of the Latin American aviation market is anticipated to register the highest CAGR during the forecast period. According to Airbus, the Latin American region might require up to 2,460 new airplanes by 2040. Narrow-body aircraft is expected to comprise 90% of this demand, reflecting the growing demand for affordable air travel across and within the region. According to IATA, the passenger traffic to/from Latin America was relatively resilient during 2021 and is forecast to see a strong rebound in 2022. This is mainly because of the high growth in domestic travel. Avianca and LATAM Airlines Group, two of the largest full-service carriers in the region, are currently restructuring their fleet and strategies to return to profits. These airlines are also adding back capacity in markets like Brazil and Colombia, which are recovering at a comparatively better pace. LCCs in some countries in the region are also continuing to add back capacity at a faster rate, which is also expected to drive the market. Though some airlines have decided to defer their aircraft deliveries in the first year of the pandemic, much of the aircraft ordered were not canceled. As the passenger traffic is growing, major airports in the region are undergoing renovation projects to increase their passenger and aircraft handling capacities. For instance, the expansion and overhaul of the Lima Airport based out in Peru is ongoing and is expected to be finished by 2025. The project is worth USD 1.2 billion. In Latin America, to boost the number of air passengers, commercial airlines are providing attractive services, like free checked baggage, competitively priced fares, and new routes. In addition, the exponential growth in e-commerce in recent months is also expected to propel the airlines to increase their cargo aircraft fleet, thereby driving the growth in demand for commercial aircraft during the forecast period.

Brazil Expected to Dominate the Market During the Forecast Period

As of 2021, Brazil had the highest market share in the Latin American aviation market. Brazil is one of the booming markets in the commercial aviation industry globally. The country is also one of the top 15 military spenders in the world. In the past few years, the Army and the Navy of Brazil have started to emphasize fleet modernization by replacing their aging aircraft fleet. Brazil procured 36 Gripen NG fighter aircraft from Sweden, and in February 2022, the country upgraded its order and placed an order for 30 additional Gripen NG fighter aircraft for the Brazilian Air Force. In the commercial sector, airlines in the country are procuring new aircraft to upgrade their aircraft fleet. For instance, in January 2022, Brazilian low-cost airline GOL secured financing of USD 600 million for the acquisition of 12 new Boeing 737 MAX 8 aircraft. The development o the domestic aircraft manufacturing industry is also supplementing the growth of the Brazilian aviation industry. For instance, in July 2021, domestic aerospace and defense manufacturing firm Embraer received an order of 30 Embraer E195-E2 aircraft from Canada-based Porter airlines as it is expanding its business to jet operations. Furthermore, to improve the infrastructure for air travel across the country, the Government of Brazil announced its plan to privatize several airports in the country. Such investments in airport infrastructure and the strong demand from the commercial sector are propelling the growth of the aviation market in Brazil.

Competitive Landscape

Some of the prominent players in the Latin American aviation market are Embraer SA, Airbus SE, The Boeing Company, Bombardier Inc., and Lockheed Martin Corporation. After the cancellation of the planned purchase of Embraer’s commercial aircraft to Boeing, Embraer announced in November 2020 that it would not sell its commercial aircraft division. Furthermore, in January 2022, the company announced that it had successfully reintegrated the branch back into its main operations. Also, the cancellation of another joint venture for the KC-390 military tactical airlifter resulted in Embraer losing the sales network of Boeing and a potential entry point into the US military market. However, the company is looking for partners on aircraft programs. With the growing demand from various militaries and the commercial LCCs, the aviation market in Latin America has huge potential for growth and can provide huge opportunities for aviation industry players to expand their presence during the forecast period.

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Table of Contents

1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
3.1 Market Size and Forecast, Global, 2018 - 2027
3.2 Market Share by Type, 2021
3.3 Structure of the Market and Key Participants
3.4 Market Share by Geography, 2021
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Porter's Five Forces Analysis
4.4.1 Threat of New Entrants
4.4.2 Bargaining Power of Buyers/Consumers
4.4.3 Bargaining Power of Suppliers
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry
5 MARKET SEGMENTATION (Market Size and Forecast by Value - USD billion)
5.1 Type
5.1.1 Commerical Aircraft
5.1.2 Military Aircraft
5.1.3 General Aviation
5.2 Geography
5.2.1 Brazil Type
5.2.2 Mexico Type
5.2.3 Argentina Type
5.2.4 Rest of Latin America Type
6.1 Company Profiles
6.1.1 Textron Inc.
6.1.2 Embraer SA
6.1.3 Bombardier Inc.
6.1.4 Airbus SE
6.1.5 The Boeing Company
6.1.6 Dassault Aviation
6.1.7 Lockheed Martin Corporation
6.1.8 Leonardo SpA
6.1.9 Saab AB
6.1.10 Honda Aircraft Company

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Textron Inc.
  • Embraer SA
  • Bombardier Inc.
  • Airbus SE
  • The Boeing Company
  • Dassault Aviation
  • Lockheed Martin Corporation
  • Leonardo SpA
  • Saab AB
  • Honda Aircraft Company