Airlines in Chile Global vs Local Outlook Analysis¶
Global vs Local outlook¶
The airline industry value chain in Chile operates within a global context, influenced by overarching international trends while also exhibiting distinct local characteristics and challenges. A comparison of global and local outlooks reveals both shared pressures and unique regional dynamics impacting each stage of the value chain.
Globally, the airline industry is expected to see strengthened profitability in 2025, with revenues projected to exceed $1 trillion and passenger numbers surpassing five billion for the first time. [1, 4, 6, 9, 11] This optimistic financial outlook is a significant trend. However, this growth is occurring despite persistent and severe supply chain issues, particularly impacting aircraft deliveries and maintenance, repair, and overhaul (MRO) capacity. [1, 2, 3, 5, 6, 7, 8, 9, 10, 11] These supply chain disruptions are leading to an aging global fleet, increased maintenance costs, and higher leasing rates, limiting airlines' ability to fully capitalize on strong demand and improve fuel efficiency. [3, 5, 6, 7, 10, 11] Labor costs, especially for skilled personnel like pilots and maintenance technicians, are also expected to rise globally. [1, 5] Furthermore, geopolitical uncertainties and the increasing focus on environmental sustainability, including the need for sustainable aviation fuel (SAF), are shaping the global outlook. [3, 4, 5, 6, 8, 10] Technology adoption, including AI for operations and customer service, is another prominent global trend. [2, 4, 12]
Locally, the Chilean airline market, as detailed in the provided value chain analysis, mirrors several of these global trends but with specific local intensity and manifestation. Like the global trend of strengthening profitability, LATAM Airlines Group, the dominant player in Chile, reported record financial performance in 2024 and continued strong results into Q1 2025, indicating a positive local financial outlook for the market leader. [LATAM 2024 Record, LATAM Q1 2025] The Chilean market is also directly impacted by the global supply chain issues. The provided text highlights aircraft shortages faced by LATAM, leading to reliance on wet leasing, a direct consequence of the global constraints on aircraft availability and MRO capacity. [LATAM Wet Lease] Personnel shortages, particularly noted in the Latin American region for pilots and technicians, align with the global challenge of rising labor costs and limited skilled personnel availability. [Forbes Wet Lease]
However, the local Chilean context presents specific nuances. The intense domestic market competition between LATAM's hybrid model and the aggressive low-cost carriers (LCCs) SKY Airline and JetSMART is a defining local characteristic. [Turismocity Airlines, La Tercera LATAM Share 2025, T News JetSMART Domestic 2024, LATAM Domestic Summer 2024-25] While LCC penetration is a global trend, the specific competitive dynamics and market shares in Chile are local phenomena. [Turismocity Airlines, La Tercera LATAM Share 2025, T News JetSMART Domestic 2024] The focus on ancillary services as a crucial revenue stream for SKY and JetSMART is consistent with the global LCC/ULCC model but is a key driver of the competitive strategy within Chile. [Value Chain Analysis] Airport infrastructure constraints, while a potential global issue, manifest specifically in the capacity and efficiency of Chilean airports, impacting ground operations and turnaround times. [Value Chain Analysis] The regulatory environment, governed by the DGAC and JAC in Chile, provides a local framework for safety, operations, and market access, influencing all value chain steps. [ICLG Aviation 2025, Prat y Cia Aviation Law]
In summary, while the Chilean airline value chain is subject to global forces like supply chain disruptions, rising labor costs, and the push for sustainability and technology adoption, its outlook is also shaped by the specific local competitive landscape, the intensity of LCC penetration, and the unique characteristics of its infrastructure and regulatory environment. The local outlook for profitability appears positive for the major players, aligning with global trends, but operational challenges stemming from global supply constraints and local market dynamics persist.
Trends detailing¶
| Value Chain Step | Global Trends (2024-2025) | Local Trends in Chile (2024-2025) | Similarities | Differences |
|---|---|---|---|---|
| Aircraft Acquisition & Maintenance | Persistent supply chain issues delaying new aircraft deliveries. [1, 3, 5, 6, 7, 8, 9, 10, 11] Aging global fleet and increased MRO costs. [3, 5, 11] Higher leasing rates. [3, 5] | Aircraft shortages faced by LATAM leading to wet leasing. [Forbes Wet Lease] SKY Airline operating newest fleet, investing in new aircraft (A321XLR). [Value Chain Analysis] JetSMART standardizing fleet. [Value Chain Analysis] | Impact of global supply chain on fleet availability. Need for maintenance and acquisition/leasing activities. | Specific strategies for fleet modernization (SKY) and standardization (JetSMART) locally. Manifestation of shortages as wet leasing by LATAM. |
| Network Planning & Scheduling | Global capacity expansion expected, though limited by supply issues. [1, 7, 10] Growth in Asia-Pacific driving network changes. [7, 10] Geopolitical tensions impacting routes. [4, 8, 10] | Extensive networks operated by LATAM (domestic and international). [Value Chain Analysis] Point-to-point focus for SKY and JetSMART. [Value Chain Analysis] Launch of new routes (JetSMART, Turkish Airlines). [Value Chain Analysis] Reduction in frequencies by some international carriers. [Aviacionline Reductions] | Airlines actively developing and adjusting route networks. | Specific competitive dynamics of network expansion by LCCs in Chile. Impact of some international carriers reducing/adding routes to Chile. |
| Marketing & Sales (Distribution) | Increased passenger numbers globally. [1, 2, 4, 6, 9, 10, 11] Focus on technology adoption (AI). [2, 12] Rising customer price sensitivity. [7] Growth in solo female travel demographic. [2] | Intense competition on fares between LATAM, SKY, and JetSMART. [Turismocity Airlines] LCCs emphasizing low prices in marketing. [Value Chain Analysis] LATAM's significant domestic market share. [La Tercera LATAM Share 2025] JetSMART addressing passenger complaints. [JetSMART Complaints] | Competition for passengers. Utilization of technology for sales and customer interaction. Customer focus, including addressing complaints. | Dominance of LATAM in domestic market share. Strong price-based marketing by local LCCs. Specific focus on reducing complaints by JetSMART. |
| Passenger & Cargo Handling (Airport Ops) | Need for improved airport infrastructure globally. [4] Impact of supply chain issues on ground support equipment. (Implied by overall supply chain issues) | Potential airport infrastructure constraints in Chile. [Value Chain Analysis] Emphasis on efficient turnaround times, especially for LCCs. [Value Chain Analysis] LATAM's handling of significant passenger and cargo volumes. [Value Chain Analysis] | Importance of efficient airport operations. Handling of both passengers and cargo. | Specific constraints and infrastructure development plans within Chile. Varying operational emphasis based on business model (rapid turnarounds for LCCs). |
| Flight Operations | Rising labor costs (pilots, technicians). [1, 5] Fuel price volatility. [6, 10] Stagnation in fuel efficiency due to older fleet. [5, 11] Safety remaining in spotlight. [8] | Personnel shortages in Latin America impacting operations. [Forbes Wet Lease] Adherence to DGAC regulations. [Value Chain Analysis] Fuel management is a key cost component. [Value Chain Analysis] | Challenges related to personnel availability and costs. Impact of fuel prices on operations. Adherence to safety regulations. | Regional specifics of personnel shortages. DGAC's specific regulatory framework. |
| Ancillary Services | Expected average airfare including ancillaries to decrease slightly in 2025, but ancillary revenue remains important. [1, 7] | Critical revenue stream for Chilean LCCs (SKY, JetSMART). [Value Chain Analysis] Unbundling of services by LCCs. [Value Chain Analysis] | Importance of ancillary revenue to airline business models, particularly LCCs. | Higher reliance and more aggressive unbundling of services by Chilean LCCs compared to LATAM's hybrid model. |
References¶
- ¿Qué aerolíneas están funcionando en Chile? en Recomendaciones de viajes - Turismocity. (2024, March 26). https://www.turismocity.cl/blog/Recomendaciones_de_viajes/p-Que-aerolineas-estan-funcionando-en-Chile-4329.html
- LATAM Airlines Group cierra un año récord con un EBITDAR ajustado superior a los US$3.100 millones y una utilidad neta de US$977 millones, junto con un sólido crecimiento de la capacidad del 15,1%. (2025, January 31). https://press.latam.com/es/press-releases/2025/LATAM-Airlines-Group-cierra-un-ano-record-con-un-EBITDAR-ajustado-superior-a-los-US-3-100-millones-y-una-utilidad-neta-de-US-977-millones--junto-con-un-solido-crecimiento-de-la-capacidad-del-15-1-.html
- Cuatro aerolíneas internacionales dejan o reducen vuelos a Chile: sorpresa y preocupación de funcionarios - Aviacionline. (2024, April 15). https://aviacionline.com/2024/04/cuatro-aerolineas-internacionales-dejan-o-reducen-vuelos-a-chile-sorpresa-y-preocupacion-de-funcionarios/
- ¿Hay escasez de aviones y personal especializado en la industria? Aerolíneas en Latinoamérica recurren al Wet Lease para cubrir demanda - Forbes Chile. (2025, January 29). https://www.forbes.cl/negocios/2025/01/29/hay-escasez-de-aviones-y-personal-especializado-en-la-industria-aerolineas-en-latinoamerica-recurren-al-wet-lease-para-cubrir-demanda
- ¿Dónde ganó más participación Latam Airlines en 2024? Perú en internacional, Chile en el mercado doméstico - La Tercera. (2025, March 19). https://www.latercera.com/pulso/noticia/donde-gano-mas-participacion-latam-airlines-en-2024-peru-en-internacional-chile-en-el-mercado-domestico/Y6Y2R3K7EJD7FJXG3FM74N74TM/
- Turkish Airlines volará 4 veces por semana de Estambul a Santiago - Infotur Latam. (2024, December 17). https://infoturlatam.com/2024/12/17/turkish-airlines-volara-4-veces-por-semana-de-estambul-a-santiago/
- LATAM alcanza utilidades por US$ 258 millones y consolida tendencia positiva en sus resultados. (2024, May 2). https://www.latamairlines.com/co/es/prensa/noticias/latam-airlines-resultados-1t-2024
- JETSMART TUVO VARIACIÓN EN PAXS TRANSPORTADOS - T News. (2025, January 6). https://tnews.com.pe/jetsmart-tuvo-variacion-en-paxs-transportados/
- Resultados 1T 2025 - LATAM Airlines Group lleva su margen operacional ajustado al 16,8% en el primer trimestre y reporta una utilidad neta de US$355 millones. (2025, April 28). https://press.latam.com/es/press-releases/2025/LATAM-Airlines-Group-lleva-su-margen-operacional-ajustado-al-16-8--en-el-primer-trimestre-y-reporta-una-utilidad-neta-de-US--355-millones-.html
- JetSMART confirma procesos para reducir alta cantidad de reclamos de pasajeros. (2024, April 16). https://www.chw.net/2024/04/jetsmart-confirma-procesos-para-reducir-alta-cantidad-de-reclamos-de-pasajeros/
- Latam cierra un historico 2024 con ganancias por US$977 millones, casi un 70% mas que el ano anterior - Emol. (2025, January 31). https://www.emol.com/noticias/Economia/2025/01/31/1119907/latam-cierre-2024-ganancias.html
- Latam cierra un historico 2024 con ganancias por US$977 millones, casi un 70% mas que el ano anterior - Fedetur. (2025, February 4). https://www.fedetur.cl/latam-cierra-un-historico-2024-con-ganancias-por-us977-millones-casi-un-70-mas-que-el-ano-anterior/
- Latam cierra el 2024 con los mejores resultados de su historia: ganancias se disparan en casi un 70% - La Tercera. (2025, January 31). https://www.latercera.com/pulso/noticia/latam-cierra-el-2024-con-los-mejores-resultados-de-su-historia-ganancias-se-disparan-en-casi-un-70/UMYQ6X5HTND45L4V47KS2H43DQ/
- JETSMART CON EL 13% DEL DOMESTICO - T News. (2024, September 24). https://tnews.com.pe/jetsmart-con-el-13-del-domestico/
- ICLG Aviation Laws and Regulations Report 2025 Chile. (2025-03-07). https://iclg.com/practice-areas/aviation-laws-and-regulations/chile
- Prat y Cia Aviation Law. https://pratycia.cl/wp-content/uploads/2022/04/AVIATION-LAW-2022.pdf