Monday, August 10, 2015

Latin America’s airline consolidation takes different path from Europe’s

Cross-border airline consolidation in Latin America is taking a notably different form than Europe’s consolidation. In Europe, consolidated companies control separately branded airlines and the decision has been made by the leadership of these airline “groups” that the individual brands—often with nationalistic ties—are important to maintain.

So a European doesn’t fly IAG; he or she flies British Airways or Iberia. Austrian Airlines and Swiss International Air Lines passengers don’t think of flying with those carriers as flying Lufthansa. And, of course, Air France and KLM are so keen on keeping their brands alive that even the parent company—Air France-KLM Group—features both carriers’ names.

In Latin America, a different course is being taken. In 2010, Aero Republica became Copa Airlines Colombia in order to unify Copa Holdings carriers’ branding. In 2013, the TACA brand was jettisoned in favor of a unified Avianca. And LAN and TAM will soon disappear as LATAM Airlines Group airlines are rebranded LATAM.

The Latin American airline groups have decided that having a pan-Latin American image is far more valuable than any benefits that might be derived from a brand associated with a particular country.
Even with a brand such as LAN that goes back to 1932 (actually, LAN Chile became just LAN in 2004 precisely to convey a broader image), it’s been deemed best to brand the airline group so that passengers feel they are able to fly one, unified airline throughout Latin America.

I think a big factor in the divergent paths European and Latin American consolidation are taking is that flying as a means of travel for most Latin Americans is still very new. Latin American airlines are extremely future-focused, eyeing new passengers from an emerging and rapidly growing middle class.

These new passengers don’t have much brand loyalty to legacy names like LAN or TAM to TACA. In contrast, Europe has a far more mature airline market in which flying has become rather commonplace. Passengers who have been flying British Airways for decades may find it jarring to board an aircraft with an IAG livery.
Or so the big European airline groups seem to think. But maybe they have it wrong. As my colleague Victoria Moores pointed out in a blog post earlier this year, the newer generation of European airlines (such as EasyJet, Ryanair and Wizz Air) have moved away from national branding and “succeeded in becoming pan-European.” Victoria noted that “these are the guys who are profitable, who are using European market liberalization to full advantage.”

(Aaron Karp - ATWOnline News)

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