Interestingly, Reuters reports that the person that made the prediction, IATA Director-General Giovanni Bisignani, also predicts North American airlines will lose $1.8 Billion in 2010. The most interesting thing about this report is that it flies in the face of the commonly held belief that Latin American companies are somehow less efficient, or run in a less efficient manner than North American companies.
Latin American airlines, do not charge baggage fees, fees for booking with a live agent nor fees for booking online. Latin American airlines do not try to nickel and dime you with fees at every turn. Yet somehow, as a group, they are more profitable.
Yes, we can give some credit to the economic downturn, and the race to the bottom of the airfare barrel that North American airlines are in, but it’s still an interesting prediction n’est pas?
I think that part of the difference lies is that air travel in Latin America is still a luxury good, like it was in the “good old days” of the airline business in North America. Since it’s a luxury good, airlines can actually charge what the ticket costs plus a bit more for a profit.
Photo Credit: BriYYZ
At least, that’s my opinion, and I’m sticking to it. What do you think?
