Ciencias econmicas y empresariales

Artculos de investigacin

 

Market share analysis: international direct offer to and from Santiago de Chiles International Airport Arturo Merino Benitez (2017-2019)

 

Anlisis de la cuota de mercado: oferta internacional directa desde y hacia el Aeropuerto Internacional Arturo Merino Bentez de Santiago de Chile (2017-2019)

 

Anlise da quota de mercado: oferta directa internacional de e para o Aeroporto Internacional de Santiago do Chile Arturo Merino Benitez (2017-2019)

Mara Gracia Ribadeneira-Pez I

[email protected]

http://orcid.org/0000-0001-7654-2947

 

Oswaldo Sebastin Vega-Prez II

[email protected]

https://orcid.org/0000-0003-0096-5219

 

Jonathan Luis Cruz-Pierard III

[email protected]

https://orcid.org/0000-0002-6960-2662

 

Correspondencia: [email protected]

 

 

*Recibido: 16 de marzo de 2021 *Aceptado: 22 de abril de 2021 * Publicado: 10 de mayo de 2021

 

 

 

       I.            Licenciada en Administracin de Empresas Tursticas y Conservacin Ambiental, Investigadora Independiente, Quito, Ecuador.

    II.            Magister en Mercadotecnia, Docente Universidad UTE, Quito, Ecuador.

   III.            Magister en Gestin Turstica, Docente Universidad UTE, Quito, Ecuador.

 

 

 

 

 

Abstract

This research work has a qualitative, exploratory and descriptive approach of bibliographic type that has for objective determine the market share generated by commercial airlines of passenger transport that operate direct international routes to and from Arturo Merino Benitez International Airport of Santiago de Chile during the period 2017-2019, as well as to dimension the size of airlines' offer, identify the market leader and observer its behavior

Keywords: Market share; international direct routes; airlines; airport.

 

Resumen

Esta investigacin presenta un enfoque cualitativo, exploratorio y descriptivo de tipo bibliogrfico que tiene por objetivo determinar la participacin de mercado de las aerolneas comerciales de transporte de pasajeros que operan rutas internacionales directas desde y hacia el Aeropuerto Internacional Arturo Merino Bentez de Santiago de Chile durante el periodo 2017-2019, adems de dimensionar el tamao de la oferta de las aerolneas, identificar el lder del mercado y observar su comportamiento.

Palabras clave: Participacin de mercado; rutas internacionales directas; aerolneas; aeropuertos.

 

Resumo

Esta pesquisa apresenta uma abordagem qualitativa, exploratria e descritiva de tipo bibliogrfico que visa determinar a quota de mercado das companhias areas comerciais de passageiros que operam rotas internacionais directas de e para o Aeroporto Internacional Arturo Merino Benitez em Santiago do Chile durante o perodo 2017-2019, para alm de dimensionar a dimenso da oferta das companhias areas, identificando o lder de mercado e observando o seu comportamento.

Palavras-chave: Quota de mercado; rotas internacionais directas; companhias areas; aeroportos.

 

Introduction

According to the Oxford University Press (s.f), the portion of a market controlled by a particular company or product is the definition of market share, however, according to Babi, Kuljanin & Kali (2014), in the field of aviation it can be identified by the dominance of an airline in a certain airport, in which case, this information can be of value for said airline to always be aware of its competitors, taking into account that market share also depends on the airline's competitors, in addition to its ability to develop efficiency, since its level (market share) indicates the degree of monopoly power that an airline has, since the greater the participation is, the greater the probability of generate a monopoly will be and vice versa (Boreinstein, 1990, cited in Babi, Kuljanin & Kali, 2014).

In addition, it is evident that today airlines face markets with a greater number of competitors, and growing, as the demand for air travels does, which makes air operators be in constant implementation of strategic measures that help increase their competitiveness (Acero, Fajardo & Romero, 2018), which can be: frequencies increase on certain routes or the offering of more seats on airplanes with greater capacity, at the convenience of the airline (Babi, Kuljanin & Kali, 2014).

Likewise, Rosales Tapia (2015, cited in Ribadeneira Pez, Vega- Prez & Cruz- Pierard, 2021), defines the international airlines offer as the service with similar or equal characteristics, given by several air operators, recognized as those businesses that operate regular flight services to transport cargo and passengers by an airplane from one point to another (Cambridge Business English Dictionary, 2021). In this way, this transportation from an origin to a destination is known as an air route or airway, defined as the predetermined space, in height and layout, where aircrafts circulate to transport passengers and cargo from one place to another (Gonzales, 2020).

On the other hand, this airport was inaugurated as Pudahuel Airport in 1967, which replaced the old Los Cerillos International Airport, with the name of Comodoro Arturo Merino Benitez International Airport in 1980. Due to the appearance of supply problems, a new air terminal was built in 1994 (Aeropuerto de Santiago- Nuevo Pudahuel, n.d) and like many other airports, it is under the concession of the private company Nuevo Pudahuel Concessionary Enterprise S.A (Direccin General de Concesiones, 2019). In addition, it has a maximum capacity of 30 million passengers (Santiago-Nuevo Pudahuel Airport, 2019) and has Categories II and III in the Landing Instrumental System established by the International Civil Aviation Organization [ICAO] under the concept of All Weather Operations [AWO] (Direccin General de Aeronutica Civil, 2020); in addition to having received the award of "Exceptional Achievement" in the Global Aerospace, Aviation, Defense and Space Outstanding Achievement Awards, due to the inspiration it has generated in other airports to create and invest in positive changes (News General, 2018).

On the other hand, the research problem lies in the limited studies carried out regarding the market share of the airlines that operate in this airport, within the international margin, showing the objective to determine the size of the international offer and identify the market leader during the study period.

 

Methodology

For this research, a qualitative approach was used to make a detailed description of the study phenomenon, complemented with the application of exploratory and descriptive research to develop topics of little knowledge to help spreading information that can be useful for future researches.

On the other hand, the research method used was the synthetic one, by the integration of the disaggregated components of the study phenomenon and the inductive method, to produce general conclusions of individuals.

Likewise, the review of secondary sources of bibliographic information was used as the designated technique to support the theoretical basis of the research, in terms of the number of airlines, number of direct international routes and market share per airline.

Therefore, the collection, review and selection of information to support the results of the investigation was carried out based on the information available on the official airport and official international air organizations web sites, validated through bibliographic charts and informations reliability criteria.

 

Results and discussion

The results obtained during the investigation are presented and analyzed below:

Number of airlines with direct international operation

To determine the size of the offer, the number of airlines with direct international operation to and from the Arturo Merino Benitez International Airport, for each of the years of study, has been identified, as shown in the figure below.

 


Figure 1: Number of airlines in operation per year

Source: Adapted from Conectividad aerocomercial internacional: Anlisis comparativo- Aeropuerto Internacional Mariscal Sucre frente a El Dorado y Arturo Merino Bentez by Ribadeneira Pez, M., Vega- Prez, S. & Cruz- Pierard, J. (2021), Dominio de la Ciencias, 7(1), p. 815.

 

In this way, figure 1 shows that in 2017 there were 22 airlines operating to and from Santiago de Chiles airport with international routes, increasing two new airlines for 2018 and reducing one in the same year, resulting in 23 operating airlines and reducing two airlines for 2019, compared to the previous year. Information that will allow the observance of the evolution of the international offer during the study period.

 

International offer size

Once the number of airlines per year had been identified, the number of international routes operated directly by each airline was determined, with the aim of sizing the international offer, discarding those routes with connections in cities inside or outside Chile and eliminating the flights operated within shared codes.

Likewise, the information presented below takes into account the number of international flights per airline regardless of whether one or more airlines operate the same destination, obtaining the following results:

 


Figure 2: Number of international routes per year

Source: Adapted from Conectividad aerocomercial internacional: Anlisis comparativo- Aeropuerto Internacional Mariscal Sucre frente a El Dorado y Arturo Merino Bentez by Ribadeneira Pez, M., Vega- Prez, S. & Cruz- Pierard, J. (2021), Dominio de la Ciencias, 7(1), p. 815.

 

Figure 2 shows that the offer of international routes for 2017 was 79 routes, operated by 22 airlines. For the following two years there is a decrease, especially for 2018 with a reduction of 5 routes compared to the previous year, while for 2019, one route is reduced, ending the year with a total of 73 routes operated by 21 airlines . Therefore, it is observed that despite the increase of airlines for 2018, the offer didnt grow as the airlines did due to various reasons, being one of them the closure of certain routes for profitability issues (Junta de Aeronutica Civil Chile [JAC], 2018).

 

 

Number of direct international routes operated by airline

In order to deepen the study, the evolution of routes by airline for each year of study is detailed below.

 


Figure 3: Number of international direct destinations operated per airline- Arturo Merino Benitez International Airport (2017-2019)

Source: own production

 

In this way, figure 3 shows that LATAM Airlines Group and its subsidiaries maintained the largest amount of international operation with the largest number of direct international routes to and from Santiago de Chiles airport (considering that LATAM Airlines Groups is a holding company that has several affiliate airlines that support its operation), despite the reduction in its action during the study period, however, it is important to mention that Sky Airlines, a Chilean low-cost airline, remains in position, without modifying the number of routes for three years. For 2018, Emirates and Estelar Latinoamericana entered the market with 1 and 2 routes respectively and Latin American Wings stopped operating due to its business restructuring as a consequence of the price war in the international market (Expansin, 2018), while for the 2019 PlusUltra and Ocean Air withdrew from the international operating margin at this airport. Avianca increased its routes from 3 to 5, with respect to the previous year, and LATAM Airlines Group and its affiliates showed a decreasing behavior in relation to the number of routes handled, while maintaining their leadership.

 

Market share per airline

Based on the information above, the market share for each of the years of study is analyzed below.

 


Figure 4: Market share per airline Arturo Merino Benitez International Airport (2017)

Source: own production

 

Regarding market share, the previous figure shows that for 2017 the market leader is LATAM Airlines Group and its subsidiaries with 46%, followed by Sky Airlines with 8% and Avianca and Latin American Wings with 5% each; American Airlines, Gol Transportes Areos and Iberia with 4% respectively and Air Canada, United Airlines, KLM Royal Dutch Airlines, British Airlines and Austral Lneas Areas with 3% respectively, the remaining with 1%. Showing that, due to the granularity and size of the market, 1 route corresponds to 1% of participation, 2 routes represent 3% and those airlines that operate 3 routes equals 4%.

In the same way, the following figure shows below the same market share relationship by airline for 2018.

 


Figure 5: Market share per airline Arturo Merino Benitez International Airport (2018)

Source: own production

 

As in the previous year, the market share for 2018 was mainly concentrated in LATAM Airlines Group and its affiliates, maintaining the same percentage (46%), despite the reduction of two of its routes. In the same way, Sky Airlines maintained the number of routes and market share, due to the fact that the decrease in the routes of some airlines was replaced by others, as in the case of JetSmart Airlines, which went from handling 1 to 4 routes, increasing its market share to 5%. On the other hand, upon the entry of Emirates and Estelar Latinoamericana into the international field of operation, a new segmentation of the market was created, which by presenting 1% and 3% respectively, made that, consequently, the leading stake for this year would not change with respect to the previous year.

In the same way, and as for the other two years, the figure below also shows the market share by airline for 2019, the last year of the period selected for the study.

 


Figure 6: Market share per airline Arturo Merino Benitez International Airport (2019)

Source: own production

 

The previous figure shows that LATAM Airlines Group and its subsidiaries continue to be the leaders in the market with a percentage point less than the previous year (45%), observing that the behavior in the market size obtained a reduction in 6 routes replaced with a lesser extent of 5 routes, resulting in a decrease of the market and one less route compared to 2018 (73 routes). In the same way, Sky Airlines continued maintaining the second place of participation, keeping its 6 operational routes since 2017, while Avianca increased its percentage to 7%, due to the adding of 2 routes, and JetSmart Airlines reduced it due to the decrease in 1 route compared to the previous year.

Once the results of the research have been exposed, the meaning of market share established by Oxford University Press (n.d) is agreed, as the portion of a market controlled by a particular company or product, through the result given by the research where the size of the market handled by each airline and the portion that each one of them maintains was determined based on the international routes operated, that show their results in percentages with reference to the total routes operated per year.

On the other hand, it agrees with the specified by Babić, Kuljanin & Kalić (2014), regarding to the determination of market share due to the dominance of an airline in an airport, evidenced in the market percentage that LATAM Airlines Group and its subsidiaries covered during the three years of study, who on average obtained 46% market share. In addition, Boreinstein (1990, cited in Babi, Kuljanin & Kali, 2014), affirms that there is a greater possibility of monopoly when more market share is generated, reflected in the average of LATAM Airlines Groups market share, which presents a difference of 32 percentage points with respect to the next competitor.

In the same way, Acero, Fajardo & Romero (2018), emphasize that today airlines face markets with a greater number of rivals that are constantly increasing to the extent that the demand for air travel does, which debates the result of the investigation, since there is no evidence of a proportional growth in the number of airlines (competitors) and this factor, especially in 2019, where the withdrew of two airlines, Ocean Air and Plus Ultra, and the absence of new air operators was identified.

 

Conclusions

Synthetizing, the investigation concludes that LATAM Airlines Group is the airline with the largest number of international routes operated, with an average of 76 routes during the three years, which represents a difference of 70 routes with respect to the next competitor, Sky Airlines, who maintained 6 average routes in the study period, thanks to the advantage factor that LATAM represents as a holding company.

In addition, it is important to mention that in terms of market size, 2018 showed the greatest decrease in the number of routes with respect to the previous year (-5), counting the routes reduced by LATAM, Avianca, British Airways, United Airlines (with one route less each, and the suspension of the 4 routes operated by Latin American Wings for that year, which were replaced by 2 from Estelar Latinoamericana and one from Emirates. Showing that, despite the constant growth in the demand for air travel, the result is not always reflected in the number of competitors that form the offer.

Finally, it can be highlighted that the airline with the best performance in operation during the three years of study, was JetSmart, which presented a positive evolution within its market share, with 1%, 5% and 4% respectively, demonstrating resilience against the monopoly generated by LATAM, differently than its competitors who reduced or suspended their operation.

 

Referencias

1.               Acero, E., Fajardo, E., & Romero, H. (2017). El mercado de transporte areo en Amrica Latinca: una revisin de literatura. Espacios, 39(3). Retrieved from https://www.revistaespacios.com/a18v39n03/a18v39n03p07.pdf

2.               Aeropuerto de Santiago- Nuevo Pudahuel. (2019). Nuevo Terminal Internacional. Retrieved from https://www.nuevopudahuel.cl/TerminalInternacional

3.               Aeropuerto de Santiago- Nuevo Pudahuel. (s.f). Historia. Retrieved from https://www.nuevopudahuel.cl/historia

4.               Babić, D., Kuljanin, J., & Kalić, M. (2014). Market share modeling in airline industry: An emerging market economies application. Transportation research procedia, 3, pp. 384-392. Retrieved from https://scholar.google.com.ec/scholar?q=Market+Share+Modeling+in+Airline+Industry:+An+Emerging+Market+Economies&hl=es&as_sdt=0&as_vis=1&oi=scholart

5.               News General. (2018). Aeropuerto Arturo Merino Bentez es nominado para premio internacional al "logro excepcional". Retrieved from https://www.nuevopudahuel.cl/noticia/aeropuerto-es-nominado-a-premio-internacional

6.               Cambridge Bussines English Dictionary. (2021). Airline. Retrieved from https://dictionary.cambridge.org/es/diccionario/ingles/airline

7.               Direccin General de Concesiones. (2019). Divisin de Construccin. Antecedentes generales del contrato de concesin. Aeropuerto Internacional Arturo Merino Bentez. Retrieved from http://www.concesiones.cl/proyectos/Documents/Aeropuerto%20Arturo%20Merin o%20Benitez%20(r)/2019/Contrato%20Aeropuerto%20AMB.pdf

8.               Expansin. (2018). La chilena Latin American Wings cancela todas sus operaciones. Retrieved from https://expansion.mx/empresas/2018/03/09/la-chilena-latin-american-wings-cancela-todas-sus-operaciones

9.               Gonzales, H. [Hugo Gonzales Aviacin y Algo Ms]. (2020, Junio17). Aerovas. [Archivo de video]. Retrieved from

10.           Junta de Aeronutica Civil Chile [JAC]. (2020). Estadsticas Histricas. Retrieved from http://www.jac.gob.cl/estadisticas/estadisticas-historicas/

11.           Ribadeneira Pez, M., Vega- Prez, S. & Cruz- Pierard, J. (2021). Conectividad aerocomercial internacional: Anlisis comparativo- Aeropuerto Internacional Mariscal Sucre frente a El Dorado y Arturo Merino Bentez. Dominio de las Ciencias, 7(1). 810-831 Retrieved from https://www.dominiodelasciencias.com/ojs/index.php/es/article/view/1742/3458

12.           Rosales Tapia, S. (2015). Estudio de Mercado de Transporte Areo de Pasajeros, ao 2011-2014. Retrieved from https://www.scpm.gob.ec/sitio/wp-content/uploads/2019/03/Estudio-AEREO-VERSIN-PUBLICA.pdf

 

 

 

 

2020 por los autores. Este artculo es de acceso abierto y distribuido segn los trminos y condiciones de la licencia Creative Commons Atribucin-NoComercial-CompartirIgual 4.0 Internacional (CC BY-NC-SA 4.0)

(https://creativecommons.org/licenses/by-nc-sa/4.0/).

 

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Copyright (c) 2021 María Gracia Ribadeneira-Páez, Oswaldo Sebastián Vega-Pérez, Jonathan Luis Cruz-Pierard

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DOI: https://doi.org/10.23857/pocaip