Aviation just survived a pandemic, ultimately trading a lack of passengers for lack of seats. Hot topics have transitioned from lockdowns and viral spread to passenger recovery and broken supply chains.
But, however far the overall industry remains from 2019 levels, the inevitable overshoot is bound to happen. In some regions, it has already happened.
Take Colombia. A large domestic market of nearly 3 million monthly seats as of the May 2023 schedule.
To put 3 million into perspective, in 2010, Colombia sat near 1 million domestic seats. In 13 years, it tripled. Heck, in 5 years, it doubled.
But, also consider that in the past six months, Colombian domestic capacity has dropped 25%. Colombia is anything but boring.
A thousand individual stories exist in the short 13-year period shown in the chart. Aero República became Copa Airlines Colombia. Aires became LAN Colombia. Copa Airlines Colombia was shut down, ultimately to be rebranded and restarted as Wingo.
Viva Air was started, adding the third major color of the Colombian flag to the airline landscape.
(See what we did there?)
Ultra Air became a thing. Ultra Air stopped being a thing. Both Avianca and LATAM navigated bankruptcy. Meanwhile, Satena and EasyFly quietly operated on the regional fringes of the market.
But, as of 2023, the latest chapter of the Colombian domestic market is now titled “rationalization”.
A market that grew too fast, following a global pandemic and without sufficient government support. For many airlines of Colombia the latest chapter of their rise and fall is complete. Yet, Colombia also serves as an early warning to overdoing it.
But what does overdoing it mean? Returning to 2019 levels of capacity by the end of 2021 oughta do it.
Yet, this is how markets become oversaturated. Airlines strike at a recovering market, clambering to grow market share while the big guys are down. That forces the big airlines to respond, protecting market share, further increasing capacity.
New aircraft have delivery commitments, made well before capacity growth looked as it did in 2022. Those aircraft are delivered. Market share shifted. Balance sheets suffered. Business case viability gave way to cash on hand.
To be certain, the rest of the world remains far from this oversupplied fate. However, individual regions are beginning to eclipse 2019 capacity with a momentum worthy of note.
The recovery still looks good. Room exists. But the closer the global industry comes to filling that recovery, the more we will see smaller regions start to exceed.
For that, we’ll have Colombia as a template.