An airline merger between Colombia's Avianca, El Salvador's TACA and Ecuador's Aerogal announced in October will likely trigger further tie-ups across an increasingly affluent and travel-hungry Latin America, analysts say.
While consolidation had been going on gradually for many years, the three-way deal could suddenly spur a more fundamental shift to major partnerships emerging in the region, which is now one of the brightest areas for a depressed commercial aviation industry.
Latin American air traffic rose 3.4 percent in September, ahead of a 2.1-percent increase seen in the Asia-Pacific region, compared to the same month last year, according to the International Air Transport Association.
North America, in contrast saw a 2.4-percent drop, while Europe's carriers struggled with a 4.2 percent decline.
That reflected a general resilience in Latin America -- excepting US-dependent Mexico -- to the world financial crisis over the past year.
The big airline markets of Brazil, Chile, Colombia and Argentina in particular have shown themselves to be especially robust.
For analysts, the conditions look ripe for Latin America to finally embrace mergers, especially as its share of world air traffic -- currently estimated at just five percent -- embarks on a steep upward trajectory.
According the Latin American and Caribbean Air Transport Association (ALTA), which represents many of the airlines, there are currently 85 carriers across the whole region, after a decade of slow consolidation winnowed their number from 120.
While the Avianca-TACA-Aerogal mesh was "one further step" in that process, the size of the deal "is significant," said Alex de Gunten, ALTA's executive director.
He declined to speculate on whether, as rumored, AeroMexico was also looking to join that merger to create a huge new air group in Latin America, but said many airlines were courting potential partners.
"They're all dating," he told AFP.
The three-way merger "will put more pressure on those who aren't so well aligned and I think you will see more in the next few years."
According to Avianca and TACA, which announced their planned tie-up early in October before Aerogal came on board at the end of that month, their combined operations would have annual sales of three billion dollars and a fleet of 129 aircraft serving more than 100 destinations.
Few details have been disclosed, except for an intention to keep all the airlines running under their respective banners for the time being. Regulators will have to give their approval for the deal to go ahead.
If it does get the green light, Latin America's biggest airline, LAN of Chile, could feel the heat.
Richard Aboulafia, a senior aviation analyst for the US-based Teal Group, said the Avianca-TACA-Aerogal marriage was "almost revolutionary" because it showed that some countries in the region had overcome nationalistic instincts that in the past prevented tie-ups with foreign partners.
"There are tremendous advantages to be gained by expanding operations and creating hubs," he said, explaining that just improving airline efficiency was a stimulus to generating more traffic.
Latin America overall had good potential to boost worldwide aviation activity because "economically the indicators are pretty strong."
The still uneven regulatory terrain, which has seen private airlines flourish in countries such as Chile, Brazil and Colombia at the same time as Argentina, Bolivia and Venezuela have tightened state control of their operators, could be managed, he said.
That could result in "an alliance of free-market countries rationalizing what they can do despite what the Chavanistas do," he said, referring to allies of Venezuelan President Hugo Chavez, who espouses a state-run socialist model for his country's main industries.
