U.S. ultralow-cost carriers (ULCCs) aren't the only ones in growth mode.

In fact, in South America over the past few years, Chile, Argentina and Peru have seen an explosion of domestic ULCC service after long lagging behind much of the rest of the world. 

"You have to think of these low-cost carriers as providing essential infrastructure," said Carlos Ozores, Latin American aviation analyst for the consultancy ICF. "They don't have great roads and trains. Having the airline capacity supports economic development; the economic development supports outbound travel."

In Chile, Sky Airline, the country's second-largest carrier behind Latam, transitioned to a low-cost model in 2015. It serves 13 domestic destinations. Sky was joined in the Chilean discount market in 2017 by ULCC startup JetSmart, which now also now serves 13 cities there.

Success in Chile facilitated JetSmart's April move into Argentina, where it offers domestic service. The carrier planned a total of 12 intra-Argentina launches between April and June serving eight cities. 

Competition, though, could be fierce. Start-up carrier Flybondi became the first Argentinian ULCC in January 2018, and it now serves 15 cities and more than 45 routes in a network that is almost entirely domestic. The third discount Argentina operator is Norwegian Air, which entered the market last October and now operates a seven-city domestic route network. 

The story is similar in Peru, where Viva Air Peru launched service as the nation's first domestic ULCC in 2017. The carrier now flies eight domestic routes from the capital of Lima. Viva is no longer alone in the Peruvian market, however. In April, Sky made its domestic entrance to the country with the launch of seven routes from Lima. 

Ozores said he doesn't expect these new ULCC entrants to launch U.S. service in the near future, although it could make sense for them to focus on the family travel market to Florida eventually. Still, he said, U.S.-based travelers can benefit from these new carriers as they drive prices down within the Latin America market. For example, both Viva and Sky are flying Lima-Cusco, which is good news for Machu Picchu visitors. 

The carriers are also increasing competition on international South American flights. Ozores said he has noticed significant price decreases from Latam on Lima to Santiago, Chile, due to competition from Sky and JetSmart.

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