Latin American aviation faces a paradox : it has all the ingredients for takeoff—vast geography, large populations, and expanding economies—but it is burdened by structural costs that limit its growth. This was the point made by Willie Walsh, Director General of the International Air Transport Association (IATA) , during the organization’s 82nd Annual General Meeting, held in Rio de Janeiro. His message was direct: if taxes and regulatory burdens remain high, much of that potential will remain unrealized.
The diagnosis is not an exaggeration. Last April, total air traffic in Latin America and the Caribbean reached 39.2 million passengers , a year-on-year increase of 1% compared to the same month in 2015. This figure contrasts sharply with the start of the year: in January, 45.1 million passengers traveled, an increase of 6.2%, driven primarily by domestic and intraregional connectivity. The subsequent slowdown, according to the reports themselves, is due to less dynamism in the Brazilian and Mexican markets, the region’s two traditional engines of growth.
But the criticism turned to the Peruvian case: if Lima introduces a tax on connecting flights, Walsh warned, “it will simply take passengers to another destination,” which highlights something governments often underestimate: the elasticity of air travel demand in relation to costs. Walsh summarized this with a compelling statistic about Brazil, where a 26.5% tax on tickets discourages international tourism to a country that, on paper, has one of the strongest destination brands on the continent.
Added to this is a structural problem: the cost of fuel, exacerbated by currency risk . Latin American airlines are among the best managed in the world, but with some of the narrowest margins in the sector globally. As has been said many times, this is an industry that moves enormous volumes of people and generates huge economic benefits in tourism, foreign investment, connectivity, etc., while its direct profitability is minimal.
The Mexican case illustrates both points. On the one hand, Mexico has growth opportunities, albeit at a slower pace, partly because it is a more mature market and partly because of the problems stemming from the US FAA’s Category 2 regulations, which threaten to be repeated.
On the other hand, there is concern about the real and nominal state of Mexico City International Airport (AICM) : slot limitations have it hamstrung. In 2025, AICM handled 44.5 million passengers, and a 10% growth is projected for 2026, but the ground infrastructure doesn’t allow it to maintain its runway capacity , which is 61 operations per hour . Walsh was clear: the major investment plans for AICM are on hold, and that’s the real question about its future capacity.
IATA’s message to the region’s governments is simple, albeit politically uncomfortable: competitive operating environments attract more traffic , generate greater economic benefits, and are more resilient than high-tax environments, which, once they drive away passengers and airlines, are much harder to recover. Domestic connectivity would be especially valuable for economic and consumer growth in countries where it is still underdeveloped.
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