Risk And Growth Vs Safe Financial Gain: Planning Growth In Latin America, Asia And The Atlantic
Predicting how international markets will perform, even in the medium term, is a treacherous business. For example, the recently-hyped high growth BRICs are hardly performing as projected. Three years ago Brazil was a market magnet; today it is the most notable fall from grace, mired in recession. Deciding on the criteria for a financially successful market presence clearly has to be about more than projected growth.
Reducing the risk profile and optimising likely profitability in a market involves anchoring such features as codeshares, partnerships (alliances, equity or otherwise), competitive conditions, the route’s contribution to an airline’s network, even the security profile.
Established routes such as the North Atlantic typically display lower risk, particularly where metal neutral JVs are in place, and are inevitably attractive. But they are relatively mature and will not enjoy the future growth rates of more risky markets of Asia Pacific and Latin America. For an airline to continue to grow – and be profitable – new markets must be found.
- In trading off between risk and reward, where are the likely new expansion routes of the late 20-teens?
- Does solid performance at home allow more risk taking in exploring new opportunities?
- Is open skies an important feature in assessing new routes or growing them?
- Will partnerships/equity investments characterise most future route expansion?
- What different/similar considerations apply for freight markets?
- ALTA, Executive Director, Eduardo Iglesias
- IATA, Regional VP, The Americas, Peter Cerdá
- FedEx Express, Managing Director Regulatory Affairs, Nancy Sparks
- Orlando International Airport, Senior Director, Marketing & Air Service Development, Vicki Jaramillo
- U.S. Travel Association, Senior Director, Domestic Policy, Erik Hansen