Héctor Iriarte
Director General Mexico, Cuba and Central America
LATAM Airlines Group
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View from the Top

LATAM Diversifies, Adapts to Economic Flux

Thu, 12/01/2016 - 12:23

Q: How is LATAM Airlines balancing the various economic fluctuations in Latin America?

A: As an ambassador airline to Latin America we operate with seven subsidiaries performing domestic flights in Argentina, Brazil, Chile, Ecuador, Colombia, Peru and Paraguay. From those locations, we also travel to Europe, Oceania and the US. Our strategy for the region has diversified to take into account economic fluctuations. Five years ago, Brazil was the strongest emerging economy in Latin America but it is now facing a complex period. We trust it is working to turn this around but this year we reduced the number of flights to the country. The Rio Olympics, however, were advantageous. We transported about 25 percent of passengers traveling to the Olympics, 30 percent of Olympic athletes and 15 percent of the world’s athletic federations, including all the Mexican athletes. Operating in such a large region allows us to diversify and to move and adapt our network to areas that are growing. For instance, Mexican travelers see Brazil as a business destination so we have not seen a reduction of Mexican flights to Brazil. Other countries in Latin America are growing, such as Chile, Colombia and Peru.

Q: Which new routes will start operating and how is the airline planning to grow in Mexico?

A: We grew significantly in 2015 in terms of destinations. Our network is based in four hubs: Sao Paulo, Brasilia, Santiago and Lima. The latter destination is important for Mexico and is showing promising growth. Most remarkably, we are introducing our first flight to Africa through a route from Sao Paulo to Johannesburg.

In Mexico, we operate from Mexico City and Cancun and new destinations include daily flights from Cancun to Bogota and Sao Paolo. We will focus on strengthening our operations to Cancun by introducing a more efficient fleet with higher capacity. Along that line of thought, we are now flying the Boeing 787 Dreamliner daily from Mexico City to Santiago and we expect to do this route next year with the 787-900, which can hold 300 passengers.

LATAM is the leading airline in Latin America and wants to represent Latin America as a whole including all its cultures, traditions and destinations. The region is a popular destination with travelers from all over the world. Mexico has a strong economy and has been growing significantly over the past few years so it is in a good position to take an increasing role in our network. We will grow in Mexico with our existing network and our One World Alliance partners. Now that we have alliances with Interjet and American Airlines, we can connect passengers from Latin America to many destinations in the US through Mexico.

Q: What is LATAM’s strategy to expand its reach beyond the Americas?

A: We are implementing an integral plan to expand our global reach. Our goal is to create a network that connects and promotes all of Latin America. Such a network can grow organically, by gradually opening more routes, or through alliances. LATAM Airlines Group shareholders have voted in favor of a US$613.2 million capital increase, paving the way for Qatar Airways to acquire 10 percent of the company’s stock. This acquisition validates our hard work and will strengthen our projects for the short, middle and long term. Having Qatar as an ally is an honor for us and creates the potential to widen our destinations in Asia and the Middle East.

Q: What characteristics define LATAM Airlines Group’s fleet?

A: Our fleet is always undergoing renovations so we can offer faster, safer and more environmentally friendly flights. LATAM’s fleet is 7 years old, making it one of youngest in the region. We operate a variety of Airbus and Boeing wide and narrow body aircraft. Our business model mixes cargo and passengers so it has to accommodate both efficiently. Distances in South America are long enough to require a fleet of large aircraft. Ours includes the Boeing 787, 767 and 787-900. We are the first airline in America to fly the Airbus A380, of which we have three and expect to receive six more this year. LATAM also plans to incorporate the Airbus A320neo.