IATA Update on Regional Developments in Latin America

Translations:

​Brasília – On the occasion of the Latin American and Caribbean Air Transport Association (ALTA) 2019 Leader’s Forum, the International Air Transport Association’s (IATA) Regional Vice-President for the Americas, Peter Cerdá, provided an update on the latest regional developments.

Aviation in this region contributes USD 156 billion in GDP and supports 7.2 million jobs.  As thebusiness of freedom, aviation connects Latin America with 160 cities across the globe, providing vital links for trade, tourism and people.

However, the industry is presently facing tough trading conditions, both globally and regionally, brought on by the overall political climate and trade-wars. Revenue passenger kilometers (RPK) for the region increased by 3.4% in August 2019, year-on-year, while freight tonne kilometers (FKT) remained flat at 0.1% growth for the same time period. With the high operating costs in the region, profitability remains a key challenge.

“Long-term estimates are for passenger traffic in the region to continue to grow annually by some 4.1%, with the rising middle classes driving a substantial part of this demand. In order to achieve this, we need political stability in the region and recent events have once again shown, this is not something which can be taken for granted,” said Cerdá.

He also called on governments to support the industry by enabling the following:

Cost Reductions: Latin America continues to be a region with high operating costs, driven by high taxes and fees imposed by governments and service providers.

“Artificially inflating costs must come to an end. It cannot be that, for example in Brazil, jet fuel is one of the costliest in the world due to lack of competition along the value chain. Recent attempts in Mexico and Panama to increase or introduce passenger taxes and fees show us that governments still view this industry as a golden goose that can be used to generate revenues for the state coffers,” Cerdá said.

Adequate Infrastructure: The provision of adequate infrastructure at affordable pricing is a must. With passenger numbers in the region set to double in the next 20 years and the majority of hubs in the region already saturated, the relevant authorities need to make this an utmost priority.

“We need proper engagement with the industry from the outset to ensure that the right infrastructure is built to serve passengers in the most efficient, secure and customer friendly manner. A case in point being Santiago de Chile, where the consultation process started much too late or Lima where lack of government support is putting the on-time completion of the second runway and terminal at risk.”

On the halting of one the few greenfield airport projects – Texcoco in Mexico City, Cerdá said: “We urgently need the Mexican government to fully disclose their plans for the three-airports-system in the Capital, as this entails an airspace modernization in order to ensure safe and efficient operations.”

Bogota was cited as an example where more capacity could be created without needing to build a new airport, simply by lifting outdated restrictions. “El Dorado Airport has night-time restrictions which do not take into account the progress which has been made in terms of noise reduction of aircraft. As a result, congestion in the morning hours causes delays, flight disruptions and passenger inconvenience. The government could easily alleviate this with immediate action.”

On the positive side Cerdá pointed to the progress made in Argentina by its air navigation service provider EANA in enhancing air traffic control (ATC) infrastructure in the country by incorporating performance based navigation (PBN), implementing 100% radar coverage and redesigning the Baires airspace.

Smarter Regulation: Aviation is a global industry and as such worldwide standards are in place to deal with topics such as consumer rights, so we urge that governments closely adhere to the Montreal Convention of 1999 (MC99). In the region we are once again faced with a patchwork of local rules and regulations, which on the surface look like they are in the customers’ interest, but ultimately drive up the airlines’ costs, hence minimizing the potential for lower fares.

“For example, Brazil needs to align with global standards in airline liability, especially in areas such as flight delays and cancellations, when these fall outside the control of the airline. Airlines operating in the country continue to be faced with an inordinate number of legal claims for moral damages, resulting in punitive financial damages, for flight disruptions which are outside their control. This practice is unfair and significantly raises the cost of travel for all, as these fines and payments must be recouped.”

On sustainable growth, Cerdá highlighted that the industry has had a target to cap emissions from 2020 for over a decade: “This goal is secured by the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) which was agreed at the International Civil Aviation Organization (ICAO) in 2016 and reaffirmed at ICAO’s 40th Assembly earlier this month. By 2050 the industry target is to cut net CO2 to half of 2005 levels. Already emissions from the average journey are half what they were in 1990. Sustainable aviation fuels (SAF) offer the biggest and most practical opportunity to cut carbon. Here we see the opportunity for governments in the region to support the realization of the potential of SAF, by creating supportive policy frameworks for their development.”

In closing, Cerdá reminded all that Flying is thebusiness of freedom which fosters business growth, people-to-people ties and personal journeys of discovery. In order to better promote this fact, especially to key political decision makers, IATA regularly publishes the correspondingeconomic studies for key markets.

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