Strikes,low-cost rivalry make for tough times at Latam Airlines

Increasing competition is making it hard to be Latam Airlines. After a union of cabin crew employees went on strike in Chile April 10, asking for improved working conditions, the carrier said that it couldn’t oblige, citing intensifying rivalry in the domestic market. "Low-cost operators offer fewer benefits than we do, and they pay less than we do," said Ignacio Cueto, Latam’s chairman. "We simply can’t compromise the profitability of the company." The strike underlines a new reality in Chile’s transportation market and legacy carriers may need to adapt, including cutting employee costs, to keep up with low-cost carriers that are quickly sucking up market share. "Low-cost carriers and low prices are here to stay," Cueto said. Cueto was referring to rival Sky Airline, which began operations in 2002 and has been operating as a low-cost carrier since 2013 -- it even hired a former head of operations from RyanAir -- and JetSmart, which started up nine months ago and already claims to control almost 12% of the domestic market. Investors haven’t much been ruffled by the strike. Shares are down less than 1% since it began.<br/>