Airfares finally appear to be falling in markets around the world, as the last revenge spending of the pandemic period is behind us and the balance between capacity and demand returns to more traditional levels. And Latin America is no exception to that pattern.

Latin America’s International Routes: Capacity vs Airfares | Summer 2024 vs Summer 2023

While airline capacity across the whole of Latin America – in broad terms - has only increased by 0.3 of a percentage point, more capacity has been added to the larger city pairs. In this analysis, we begin by exploring the twelve largest international markets in Latin America, and compare the changes in capacity along with the changes in average airfares from the summer season 2023 and 2024 – and there are some interesting patterns in the data.  75% of the routes have seen both increases in capacity and reductions in average airfares.

Increases in airfares alongside capacity growth on routes such as Bogotá to Miami (BOG – MIA) and Bogotá to Panama (BOG – PTY) suggest that the routes were previously underserved and the additional demand quickly absorbed.

Despite its geographic location, Santiago has always been a well-regarded market (and the base for the original LATAM airlines) where the combination of both passenger and cargo demand creates a profitable environment for most airlines. From our analysis:

• Lima to Santiago (LIM – SCL)
  • 24% overall increase in capacity; all from the LATAM group
  • Airfares have fallen by less than 1%.
• Sao Paulo to Santiago (GRU-SCL)
  • Witnessed a larger 44% increase in overall airline capacity;with LATAM alone adding 37% more capacity.
  • Airfares have fallen by 11%.

It’s interesting to see two similar markets with similar capacity growth, from the principal airline operator, result in marked changes in average airfares. Suggesting that perhaps the Sao Paulo market required more aggressive airfares stimulation than Lima.

Demonstrating the normal laws of supply and demand - a 6% reduction in capacity between Guadalajara and Los Angeles (GDL – LAX) led to a 13% increase in average airfares. Four airlines operate this route - Aeromexico, Alaska Airlines, Viva Aerobes and Volaris - no airline significantly adjusted capacity, some flights were dropped by all carriers, but it’s certainly food for thought when fares can increase so highly off a relatively small reduction in capacity.

Across the major international markets nine of the twelve airport pairs saw airfares fall year-on-year, however, the same cannot be said of the Mexican domestic market where we analysed a selection of the major trunk routes.

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Mexico’s Domestic Routes: Capacity vs Airfares | Summer 2023 vs Summer 2024 

Facing a range of operational issues from crew resources to engine maintenance some of Mexico’s airlines have had to significantly adjust their operations, resulting in less capacity being operated on several key routes as illustrated below. 

An 18% reduction in capacity season on season between Mexico City and Cancun (MEX – CUN) has resulted in a 51% increase in airfares, while on Mexico City – Merida (MEX – MID) capacity remained virtually unchanged and average airfares increased by nearly one-third; from US$108 seen last year to US$143 this year.

Ultimately, many airlines are struggling to operate to the full potential due to ongoing maintenance and supply chain issues. As a result, planned capacity increases in many markets may be delayed, which in turn will likely result in airfare prices remaining at last year’s levels. All of which perhaps suggest that if you see a bargain airfare grab it while you can!

Methodology

• Summer season refers to that as defined by IATA as beginning on the last Sunday in March and ends on the last Saturday in October.
• Airfares price calculation is based on approx. 10 billion airfare records for Latin America routes and the calculation method is an average of all observed prices from first observation (6 months prior departure) to last observation at departure.  Discover more about OAG's airfare data here.