Fueling change: the drive for fuel efficiency and lower emissions in the Latin American aviation market

How are fuel efficiency and emissions shaping the future of the aviation industry in the region?

Latin America’s aviation sector stands at a critical juncture, where the drive for increased fuel efficiency intersects with growing pressures to reduce environmental impact. The aviation industry in Latin America is balancing its need for operational efficiency with the rising demand for sustainable practices. This delicate balance defines the future of aviation in the region.

Let's look at how Latin American airlines are navigating sustainability and operational challenges through innovation and collaboration.

Fuel efficiency: current trends and innovations

At the core of improving fuel efficiency lies fleet modernization. Airlines across Latin America, including LATAM Airlines Group and Avianca, are investing heavily in newer, more fuel-efficient aircraft models like single aisle Airbus A320neo (new engine option). Overall, the A320neo delivers 20% fuel savings and CO2 reduction compared to previous-generation Airbus aircraft or the A320.

On the one hand, Avianca operates 20 A320 and 14 A320neo and its fleet averages 3.2-year-old and 3.3-year-old respectively. On the other hand, LATAM Airlines operates 243 A319/A320/A321 and 48 A320/A321neo and its fleet averages 13.1-year-old and 2.5-year-old respectively.

In terms of new orders, Avianca has 85 A320neo and LATAM Airlines 77 between A320/A321 neos. Although this is good news, one can expect that for at least LATAM Airlines 50% of the new aircraft will be for fleet replacement purposes (retirement of older A320) and 50% used for fleet expansion as the airline aims to reduce further its costs per available seat kilometer to be able to compete in a more balanced field with Low-Cost Carriers challengers such as Sky Airline and JetSmart Airlines.

In addition, Sky Airline operates a dedicated fleet of 32 A320/A321neos (4.2-year-old) while JetSmart Airlines operates 11 A320 and 27 320/A321neo and its fleet averages 6.5-year-old and 1.8-year-old respectively. In terms of new orders, Sky Airline and JetSmart Airlines have 94 A320/A321neos 14 A320/A321neos which probably will be used mostly to grow its fleet in the region to further take market share away from other competitors. This advanced aircraft offers a significant reduction in fuel consumption, helping airlines lower operational costs while improving environmental performance.

Upgrading a fleet is not just about staying competitive, it’s also about aligning with global sustainability goals. Modern aircraft bring down fuel consumption significantly, making them crucial to long-term CO2 reduction strategies and profitability as fuel costs is the main cost driver for airlines in the region. Besides, for many airlines, the price of oil (Brent) is highly correlated to the price of aviation fuel and therefore a significant determinant of capacity growth.

Apart from fleet investments, many airlines are optimizing their operations to achieve better fuel efficiency. This includes refining more flight routes, working closely with Air Navegation Service Providers to minimize delays on the ground and in the air, , and leveraging advanced flight planning solutions. These initiatives collectively reduce fuel burn and help airlines operate more cost-effectively.

Every aspect of flight operations, from route optimization to real-time data analysis, contributes to incremental but significant fuel savings. This is where the intersection of technology and operations is making the biggest impact.

Technological innovation is a cornerstone of the region’s push towards more fuel-efficient operations. Airlines in Latin America are incorporating cutting-edge technologies such as more efficient engines, aerodynamic improvements, advanced avionics systems and gate management, slot coordination, Airport CDM and Air Traffic Flow Management software solutions as they aim to reduce cost, improve asset productivity and deliver a door-to-door gate-ground-air efficient solution aligned with planned growth and a significant reduction in CO2 emissions. Indeed, these innovations will enhance fuel efficiency and reduce the overall environmental footprint of aviation.

Investing in advanced technologies like next-gen avionics and efficient engine designs are essential for reducing operational costs and improving sustainability. These innovations are driving change in the sector and should positioning the region as a leader in eco-friendly and sustainable aviation.

Emissions: regulatory and technological responses

Latin American governments are increasingly adopting stringent environmental regulations to curb aviation emissions. For instance, Brazil, the largest aviation market in the region, is aligning with the International Civil Aviation Organization (ICAO) standards. These regulations mandate the reduction of greenhouse gas emissions and promote the use of Sustainable Aviation Fuel (SAF).

Regulatory changes are reshaping how airlines in the region operate. Complying with ICAO standards is no longer optional; it’s a requirement for staying competitive in the global aviation market.

While the adoption of SAFs is still in its early stages, it presents a promising avenue for the region’s aviation sector to reduce emissions. SAFs can lower lifecycle greenhouse gas emissions by up to 80% compared to conventional jet fuel. Local initiatives focused on producing SAFs from biofuels are emerging, offering the region a valuable opportunity to align its fuel strategies with sustainability objectives and 2050 targets.

The transition to SAFs is one of the most important steps we can take to reduce aviation’s carbon footprint. Although it’s still in its infancy, the local development of SAFs holds great potential for the future.

Some Latin American airlines are complementing their sustainability efforts with carbon offset programs and investing in projects that help mitigate their environmental impact. From reforestation to renewable energy initiatives, these programs are essential tools for airlines seeking to offset their emissions.

Carbon offsetting is a growing strategy for many airlines in the region. It provides a way to balance out emissions while they work on longer-term solutions like SAFs and technological innovations.

Challenges and opportunities in achieving sustainability

Despite the progress being made, current macroeconomic environment (high inflation, high interest rates, low GDP growth, etc.) in many Latin American countries present significant challenges to rapid fleet modernization and the adoption of new technologies. Airlines across the region often face financial constraints, which can slow down their transition to more fuel-efficient aircraft and sustainable practices.

Creative solutions, such as forming strategic partnerships and making incremental investments, are helping airlines overcome these financial limitations and continue their sustainability journey.

The infrastructure required to support the widespread use of SAF is still in its early development stages in Latin America. Investments in production facilities and distribution networks are essential for enabling the large-scale adoption of these sustainable fuels across the region. While developing this infrastructure is a major challenge, it also represents a significant opportunity for growth. With the right investments and support from their governments including tax credit and low-interest rate funding, the groundwork for a more sustainable future can be established.

Collaboration between airlines, governments, and industry stakeholders is crucial to advancing fuel efficiency and reducing emissions. By working together, these groups can accelerate the development of new technologies, simplify regulatory compliance, and pool resources to address shared challenges.

Furthermore, regional cooperation can help airlines in Latin America achieve sustainability goals that would be difficult to reach individually, while also promoting the sharing of best practices, regulatory alignment, and joint initiatives.

Latin America's aviation sector is undergoing a transformation, with fuel efficiency and emissions reduction at the core of this evolution. By investing in fleet modernization, adopting advanced technologies, complying with new regulations, and fostering regional collaboration, airlines and governments in the region can position themselves for a more sustainable future while allowing airlines to continue its planned growth.

 

Authors

Sajedah Rustom is the Chief Executive Officer of AviaPro Consulting, a global boutique aviation consultancy offering solutions in Aviation Strategy and Operations Consulting, Technical and Engineering Services, Training and Development, and Aviation Analytics and Technology Solutions.

Rene Armas Maes is an independent aviation consultant and contributor to America Economia and Flight Global. He is Board Member of the Aviation Festival Americas. His experience includes commercial and business restructuring, strategic planning and cost reduction initiatives.

 

This article is also featured in América Economía.