Los Angeles Mexico S America Report
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July 2016 Los Angeles: Travel Prospects from Mexico and South America Travel Performance - Mexico Direct arrivals from Mexico’s main feeder cities to Los Angeles grew by an estimated 23% through YTD July as carriers delivered 21.9% more seats (133 thousand seats) versus a year ago. American Airlines, which began service to LAX from Mexico City in September 2015, is providing a full year of service in 2016. Interjet began service from Guadalajara in February 2016 which has also contributed to the growth in arrivals so far this year. The outlook for 2016 remains positive as planned seat capacity is expected to grow by 19.3% which will result in direct air arrivals growing by 21.8% if carriers can maintain load factors. Travel Performance – South America Direct arrivals from South America fell by 4.9% through YTD July despite a 2.2% increase in seat capacity. Load factors fell to 79% through July versus 85% a year ago. If carriers maintain the lower load factors, direct arrivals from South America will fall by 3% despite carriers’ plans to provide 1.1% more seats 2016. Carriers plan to provide fewer seats in 2016 from Brazil, Panama and El Salvador. Arrivals from Colombia will double as Avianca will provide a full 12 months of service in 2016. 1 Table of Contents Los Angeles – Mexico Performance & Outlook 3 2016 Outlook for Capacity & Direct Arrivals from Mexico to Los Angeles 5 Los Angeles – South America Direct Air Arrivals & Capacity 6 Outlook for 2016 7 Summary of Seat Capacity and Arrivals from South America for 2016 8 ©REDmarke Research 2 Los Angeles – Mexico Performance & Outlook Direct air arrivals from the main feeder cities in Mexico to Los Angeles grew by an estimated 23% through YTD July 2016. Arrivals grew from three out of five feeder cities. Arrivals from Morelia and Hermosillo were down by 3.6% and 1.1% respectively. YTD July 2016 Direct Air Arrivals from Mexico to Los Angeles Carrier Mexico City Hermosillo Guadalajara Morelia Zacatecas Total % Change Aeromexico 191,635 6,201 71,134 268,970 12.2% Alaska Airlines 26,556 26,556 -50.7% United Airlines 27,003 27,003 1.8% Volaris 33,985 95,573 19,215 14,875 163,648 11.0% Delta Airlines 31,401 31,401 -18.0% American Airlines 57,148 23,341 80,489 100% Interjet 30,473 30,473 100% Total 309,771 6,201 278,478 19,215 14,875 628,539 23.0% % Change 25.9% -1.1% 23.9% -3.6% 4.8% 23.0% Source: Los Angeles International Airport; US BTS and REDmarke Research. Direct air arrivals reached their highest level in more than 7 years through YTD July. Direct Air Arrivals from Mexico’s Feeder Cities into LAX (YTD July each year) 628,539 517,195 511,028 474,744 472,235 467,433 464,665 405,365 2009 2010 2011 2012 2013 2014 2015 2016 Source: Los Angeles International Airport; US BTS and REDmarke Research. ©REDmarke Research 3 Carriers provided 21.9% more seats (133 thousand seats) to Los Angeles from the five major feeder cities in Mexico through YTD July 2016. New service by Interjet from Guadalajara and an increase in capacity by Aeromexico, American Airlines and Volaris more than compensated for a reduction in capacity by Alaska Airlines. Direct Seat Capacity from Mexico to Los Angeles YTD July 2016 United American Delta % Change Aeromexico Alaska Airlines Volaris Interjet Total % Change Airlines Airlines Airlines Mexico City 225,128 30,728 67,410 39,140 362,406 25.5% Hermosillo 10,500 10,500 1.4% Guadalajara 81,868 34,555 27,136 105,691 39,800 35,850 324,900 22.8% Morelia 24,135 24,135 -6.4% Zacatecas 18,226 18,226 3.0% Total 317,496 34,555 30,728 94,546 187,192 39,800 35,850 740,167 21.9% % Change 12.9% -50.3% 2.2% 100% 9.9% -18.4% 100.0% 21.9% Source: REDmarke Research calculations. Total seat capacity reached 740 thousand through YTD July 2016. Seat Capacity from Mexico’s Feeder Cities up 24.0% (YTD July) 740,167 638,575 584,806 603,204 607,093 530,327 543,116 531,906 2009 2010 2011 2012 2013 2014 2015 2016 Source: LAX, US BTS and REDmarke Research calculation. ©REDmarke Research 4 2016 Outlook for Capacity & Direct Arrivals from Mexico to Los Angeles Carriers plan to deliver 211 thousand more seats to LAX from the five major feeder cities in Mexico during 2016. Interjet’s new service from Guadalajara will contribute 82 thousand of the additional seats. A full year of service from Mexico City by American Airlines will also help grow capacity in 2016. Annual Seats & Passenger Outlook from key Mexico Cities to Los Angeles % Change % Change City Carrier Capacity Passengers from 2015 from 2015 Mexico City Aeromexico 378,265 9.5% 309,973 9.0% United 54,480 5.0% 47,150 5.5% Volaris 78,738 38.9% 66,530 36.3% AA 116,370 205.8% 98,764 248.9% Hermosillo Aeromexico 16,550 -7.8% 9,529 -6.8% Guadalajara Aeromexico 144,038 6.2% 121,627 7.5% Alaska 61,490 -0.4% 46,107 -0.2% Delta 66,560 -17.8% 54,871 -12.1% Volaris 188,389 10.6% 165,234 11.2% AA 46,720 76.3% 39,987 107.0% Interjet 81,750 100.0% 69,488 100.0% Morelia Volaris 42,751 -1.1% 32,639 0.8% Zacatecas Volaris 32,546 6.6% 27,055 7.6% Total 1,308,647 19.3% 1,088,953 21.8% Sources: OAG and REDmarke calculations The increase in seat capacity will result in direct air arrivals from Mexico’s main feeder cities growing by 22% in 2016. 2016 Outlook for Capacity & Direct Arrivals from Mexico to Los Angeles 1,308,647 1,097,340 19.3% 1,088,953 1,013,488 968,808 927,200 8.3% 893,836 836,661 857,416 776,216 21.8% 2012 4.2% 2013 2014 2015 2016 Seat Capacity Passengers Sources: OAG for capacity. REDmarke Research for direct air arrivals ©REDmarke Research 5 Mexico City will receive an additional 97 thousand seats in 2016 as American Airlines provides a full 12 months of service. New service by Interjet will result in Guadalajara gaining 114 thousand seats in 2016. 2016 Outlook for Capacity & Direct Arrivals from Mexico to Los Angeles 2014 2015 2016 % Change Seat Capacity Mexico City 464,368 530,422 627,853 18.4% Hermosillo 19,374 17,950 16,550 -7.8% Guadalajara 453,372 475,192 588,947 23.9% Morelia 46,740 43,242 42,751 -1.1% Zacatecas 29,634 30,534 32,546 6.6% Total 1,013,488 1,097,340 1,308,647 19.3% Direct Arrivals Mexico City 394,328 436,308 522,417 19.7% Hermosillo 13,660 10,229 9,529 -6.8% Guadalajara 390,504 389,763 497,314 27.6% Morelia 35,077 32,390 32,639 0.8% Zacatecas 23,847 25,146 27,055 7.6% Total 21.8% 857,416 893,836 1,088,953 Sources: OAG & REDmarke Research calculations. Carriers plan to provide a total of 211 thousand more seats to LAX in 2016 from the five major feeder cities in Mexico. If carriers can maintain their load factors, they will deliver nearly 1.1 million passengers to LAX in 2016. Los Angeles – South America Direct Air Arrivals & Capacity Direct air arrivals from South America into LAX fell by 4.9% through July 2016 or by 20,719 passengers despite a 2.2% increase in seat capacity. Carriers saw their load factors fall to 79% from 85% a year ago through July. Direct Passengers & Seat Capacity to Los Angeles YTD July Passengers Passengers Seats Seats Country Carrier % Change % Change 2015 2016 2015 2016 Brazil Korean Air 12,432 11,193 -10.0% 23,270 19,862 -14.6% Brazil American Airlines 42,628 40,396 -5.2% 51,939 49,125 -5.4% Colombia Avianca 4,132 25,485 100.0% 4,480 30,500 100.0% Peru Lan Airlines 88,193 92,019 4.3% 95,660 94,052 -1.7% Panama COPA 87,695 79,896 -8.9% 105,304 98,433 -6.5% El Salvador Delta 28,561 21,679 -24.1% 33,936 24,480 -27.9% El Salvador Avianca 98,977 68,422 -30.9% 114,802 120,826 5.2% Guatemala Avianca 26,006 27,401 5.4% 30,194 31,920 5.7% Guatemala Delta 35,233 36,647 4.0% 40,183 41,447 3.1% Total 423,857 403,138 -4.9% 499,768 510,645 2.2% Sources: LAX, US BTS, OAG and REDmarke Research. ©REDmarke Research 6 YTD July Seat Capacity and Direct Air Arrivals 510,645 499,768 461,264 399,560423,857 403,138 376,984 2.2% 328,345 8.3% 313,904 2012 286,283 -4.9% 2013 6.1% 2014 2015 2016 Seat Capacity Passengers Sources: OAG and REDmarke Research calculations. Outlook for 2016 Direct air arrivals from South/Central America to LAX will fall by 3% in 2016 based on the current outlook for seat capacity and load factors. Carriers plan to increase seat capacity by 1.1% (10 thousand seats) but lower load factors will result in a decline in arrivals. Carriers plan to provide 9 thousand fewer seats from Brazil and 10 thousand fewer seats from Panama in 2016.