Enabling Aviation to Drive Growth in Latin America

IATA has welcomed the improvements in safety that have resulted from strong partnerships among aviation stakeholders in Latin America and the Caribbean, and urged governments in the region to use this as a template for working together in other areas.

Speaking at the Latin America and Caribbean Air Transport Association (ALTA) Airline Leaders Forum, Tony Tyler, IATA’s Director General and CEO, said that governments and industry have worked together for several years to drive safety improvements, contributing to a better than 50% reduction in jet hull loss accidents in 2014, compared to the average of the previous five years.

“Our success in safety is proof that the partnership of government and industry is powerful. We need to apply this formula to other areas that are holding back aviation’s ability to be a catalyst for economic development and job creation,” said Tyler.

Tyler noted that in places like China, Singapore and Middle East, governments have used the power of aviation’s connectivity to help build their economies and create wealth.

“There is no reason that more governments in Latin America and the Caribbean cannot apply it to enable aviation to deliver a powerful economic boost at a time when many countries here are struggling.”

Tyler urged governments to use the same cooperative approach to accelerate infrastructure development, which lags behind demand for aviation connectivity.

“Inadequate aviation infrastructure is an economic handicap. We forecast regional demand in 2034 of 525 million annual passengers, more than double the 240 million passengers expected this year. Yet, key airports in Argentina, Brazil, Colombia, Ecuador, Mexico, and Peru already face growth constraints,” he said.

Additionally, governments in the region should reform taxes and charges policies that impose crippling costs on the industry and overall economy.

“The region is rife with unreasonable tax and charges policies that hurt travel and constrain economic development. Brazil’s airlines pay some of the highest fuel charges in the world, 17% above the global average. Ecuador is looking at a similar pricing model that could raise fuel costs there by as much as 30%. Panama plans to raise air navigation charges 97% over three years. Peru levies an unjustified 16% VAT on air traffic control charges. Governments need to recognize that aviation’s greatest contribution is not in providing tax receipts to the treasury but in the growth and development it stimulates,” Tyler added.

Governments also need to honor their obligations under international agreements that allow their citizens to benefit from the global connectivity aviation provides.

“Venezuela refuses to permit airlines to repatriate $3.8 billion of their own money. The negative impact is dramatic. Passenger traffic for Venezuela fell 17% in the 12 months through 31 August 2015 compared to the prior 12 month period. Airlines operating to Argentina are also seeing restrictions on repatriating funds. We are seeking to meet with the new government as soon as it is in office to find a solution that will preserve connectivity and the vital economic benefits it brings,” said Tyler.

Consumer rights regulation is another area that is ripe for a more collaborative approach, one that recognizes that airlines, governments and passengers share a common goal of getting to destinations safely, reliably and on-time.

“We have seen a proliferation of prescriptive, unharmonized passenger rights regimes that create difficulties for the industry and confusion for our customers. Furthermore, the purpose of many of these regulations appears to be to defend passengers from airlines. This results in rules which actually reduce consumer protection and convenience – through higher fares, less choice, and more confusion—and which raise costs for airlines that must comply with a plethora of differing and often conflicting regulatory regimes,” he said.

The air transport sector already makes an enormous contribution to the region. It supports 4.9 million jobs including tourism-related jobs and contributes $153 billion to GDP.

“Aviation can do far more if governments adopt the winning formula that has brought so much success elsewhere,” Tyler concluded.

See also: Aviation Industry Update by DG of Association of Asia Pacific Airlines, Mr. Andrew Herdman.