This week the Paris Air Show 2023 took place at Le Bourget airport, the first post-pandemic edition of the most important event of the global aerospace industry.
In this context, we had the opportunity to talk to Arturo Barreira, Airbus’ president for Latin America and the Caribbean, about different topics in the region.
Aviacionline (AL): We start with the A220, an aircraft that, due to its capacity, seems to have the ideal size for Latin America — but you have not yet sold a single unit [there]. Is there a specific reason?
Arturo Barreira (AB): The thing is, I think Airbus has been extremely successful with the A320 family in the region.
The A220, designed from scratch with the latest technology, offers comfort at the same level as the A320 family, setting a standard in the market. It has its space for those routes between 100 and 150 seats. We see that many of our customers started with A319s, have been migrating to A320s and A321s and have been very successful. And we think that for that 150-seat niche there is no better aircraft than the A220 because of its comfort, so we think we have opportunities in the region with several customers for the model to be successful.
AL: But you have not sold any yet, do you think you are going to place some units to operators in Latin America in the next few years?
AB: Yes, as I was saying, I think it is the ideal aircraft, so it is only a matter of time before we penetrate the Latin American market with the A220.
AL: Are you considering new operators or those already on the Airbus platform, such as the A321?
AB: Not necessarily, we talk to all customers in Latin America about our entire range of aircraft. They can be operators that operate Airbus aircraft or not, but it makes no difference to the A220 whether their new customers are Airbus operators or not, simply with those that already have our families there is more of a relationship and proximity.
AL: A lot of the efforts to increase volume come from the success of the A321 in Latin America with the low-cost carriers. Do you think that trend of new orders for larger narrowbody aircraft will continue in the next few years in Latin America or will it stabilize?
AB: The A321 is definitely the most competitive single-aisle aircraft in the market in unit costs, and there has been a trend in recent years to be more efficient to that extent and that is why the success of the A321 has become so relevant. We are not going to say that all the aircraft we are going to have are A321s, there are going to be companies that need to have a mix because not all sizes are the same size, but what we do see is that, for example, in the case of the low-cost operators, their focus in an increasing percentage is the A321.
AL: Does that mean that the momentum is going to continue?
AB: Yes, without a doubt. The A321 is a market leader.
AL: Has the A319neo sold any units in Latin America?
AB: The A319ceo is an aircraft that due to its performance and the conditions of the hot & high market and those of the time (we sold many in two-class configuration of around 125 seats), it was a natural replacement for the previous aircraft that were operating, such as the MD or 737, because it was much more technological. At that time the airlines were also more focused on the cost per trip than on the unit cost. But we saw that with the A320neo you can have the same hot & high performance and range or better, so many of our customers made the switch from A319ceo to A320neo.
AL: So you don’t think [the airlines] will go back to the A319neo in Latin America?
AB: We see that there is less intention to go to aircraft that are better in cost per trip, when the A320neo is able to give you the same performance at a lower unit cost.
AL: There is still a long way to go for full ceo replacement. How do you plan to meet that challenge if you are short of production capacity?
AB: In Latin America, we are going to need more than 2,400 aircraft in the next 20 years. 40-45% is replacement of old fleets and the rest is growth. We see a potential for not only replacement of these old fleets, but also growth with new aircraft.
AL: But with the lack of production capacity, aircraft prices are going up. In a region with less purchasing power like Latin America, aren’t you concerned about [aircraft] prices or financing costs growing too much?
AB: In Latin America, the growth potential is significant for several reasons. One, the number of trips per capita is very low and there are no travel alternatives, there are practically no trains, it is not like in Europe where there may be airplane substitutes for certain routes. On the other hand, there are major geographical accidents in some countries. We think that all this will continue to stimulate the market to reach higher per capita travel levels.
Therefore, the price of the aircraft is not the only factor to consider. Today our entire line, from the A220 to the A350, is 25% more fuel efficient than existing aircraft, and that cost can represent up to 40% of an airline’s structure.
AL: How do you see the performance of Pratt & Whitney GTF engines in Latin America versus the rest of the world?
AB: The GTF engine is meeting expectations in terms of fuel consumption. There are indeed issues to improve, but it is the platform that makes the A320 a winning family.
AL: The A330neo seems to be gaining speed in its orders. But although it is your smallest widebody, it has not yet sold much in Latin America. What is your outlook on that?
AB: The A330 is the most successful widebody family with more than 1,500 aircraft in operation. We see that there is a wave of replacements of the A330-200 and -300 that were very successful in the region, so we know that the future of the A330neo is going to be important here.
Today we have Azul, which is the first A330neo operator in Latin America and we think we have a lot of potential for further growth. We also just won a new A330ceo operator with Boliviana de Aviación, so we remain very optimistic about the potential of the A330 in Latin America.
It is true that it is not a region of widebodies. More than 90% of the aircraft they operate are single-aisle, and of these, 60% are [of the] A320 family.
AL: And what are your expectations regarding the A350? Because it seems too big for Latin America… Are you working hard to position it or are you focusing more on the A330neo?
AB: This is horses for courses, isn’t it? There are aircraft that are appropriate for certain situations, customers and environments and others that are not. It depends on volume, cargo, performance, etc., so you can say that for certain campaigns this aircraft is more appropriate than another.
It is true that in Latin America there are few widebodies (it is the region with the lowest proportion), and they are also the smallest. But for example, we now have a couple of A350s operating with Azul precisely here to Paris, and they are very happy with the performance of the aircraft on the route.
The A350 is the latest widebody to be developed, and it has all the technology, performance and economics that make it very competitive.
AL: And between the A330 and the A350, which has more future in Latin America in terms of sales?
AB: Surely in Latin America the smaller widebodies have more future than the larger ones because historically there has been that trend, so I think that in the short term the A330neo has more potential, but the A350 is an aircraft for those high density routes, especially from Brazil, where they can carry 20 tons of cargo on top of that.
Airbus in Latin America and the Caribbean
According to the latest Global Market Forecast (GMF) that Airbus had presented at the end of 2022, origin-to-destination (O&D) passenger traffic in Latin America will increase by 3.7% per year over the next 20 years, doubling over the next 20 years. Domestic traffic will grow at a faster rate of 4.0 percent annually, while intra-Latin America and the Caribbean traffic will grow by 3.2 percent.
It is forecast that 38,000 new pilots and 38,000 technicians will need to be trained over the next 20 years in Latin America, representing service revenues of $13 billion by 2041.
In Latin America and the Caribbean, Airbus has sold more than 1,200 aircraft and has more than 500 aircraft pending delivery. Around 60% of the fleet in service is Airbus after capturing 70% of net orders in the region since 1994.
