Vuelos de placer.

AuthorBooth, Bob
PositionTT: FLIGHTS OF FANCY.

Can you imagine a profitable Latin American airline? American Airlines losing domination in the region? Disney World in Peru? Bob Booth can. The former airline executive and chairman of consulting firm Aviation Management Services gave LATIN TRADE a sneak preview of his popular industry newsletter Aviation-- Latin America & Caribbean, dated January 2006.

As we look back at the year 2005, several events and happenings stand out. First of all, the air traffic market in Latin America and the Caribbean delivered its fifth consecutive year of double-digit growth and remains the world's fastest-growing region. So much for the doom-and-gloomers who said the industry would never recover from its tailspin at the end of the last millennium. Figures for the fourth quarter of 2005 are not available yet, but the numbers in our forecasts (see page 50) are self-explanatory. The recently finalized Free Trade Agreement of the Americas (FTAA) takes off on Jan. 1, 2006, so, as I like to say, you ain't seen nothin' yet.

The FTAA (or the New Old Deal) promises to transform the entire region into one big market for the 800 million people who live in the Caribbean, North, Central and South America. The Agreement is largely a rehash of many existing industry practices--foreign ownership of airlines anywhere in the Americas and the "Freedom of the Sky" for carriers to fly whoever, wherever and whenever they want--have been in place for years, but investors always like to "get it in writing."

The New Old Deal will certainly continue to drive increased trade, lifting demand for air cargo, not just between the Americas, but also within Latin America. Expanded trade has--as it always does--already fueled the takeoff of tourism, now the region's single-largest employer, as the lap-top crowd has discovered their next-door neighbors' fabulous sights and attractions. Among the ever-growing list of new hotels and tourist attractions, clearly last year's standout was the groundbreaking of the new Disney World in the Urubamba Valley of Peru.

Thanks to deregulation and the explosion of TNT (trade and tourism), Latin American and Caribbean carriers are back. While the Latin carriers' market shares eroded between 1990 and 1999 an average of 10 percentage points, beginning in 2000, the indigenous carriers' new management models. such as the Southwest South franchises and the Air Americas consortium, have resulted in recovering most, if not all, the market share losses of the previous 10 years.

SOUTHWEST SOUTH'S EXPANDING NETWORK

One of the most surprising events in 2005 was the consolidation of the Southwest South franchise system, now up and running throughout Latin America. When Herb Kelleher, CEO of Southwest Airlines, first announced the idea of franchising in 1999, people thought Europe would be his prime target market. But as a result of people like Juan Maggio of Southern Winds in Argentina, Juan Emilio Posada of ACES in Colombia and other airline executives knocking on his door in Dallas, the concept has really taken off in...

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