NASSAU, BHS. – The vision of the leaders in aviation in Latin America is clear: to create a strong and inclusive industry in the region , with more feasible quotas and better service, mainly in infrastructure, so that with a shared vision and collaborative actions the sector can continue its growth and consolidate itself as a key driver for regional development.
One of the topics that specialists placed the most emphasis on during the “CEO Vision” panel within the framework of the ALTA AGM & Airline Leaders Forum 2024, was the high cost of air transport , especially due to airport taxes and fees.
“Up to 28% of the final price of a domestic ticket in Colombia is made up of taxes and fees; for international flights, this figure can reach 60%,” said Federico Pedreira, CEO of Avianca .
He noted that although airlines have made considerable efforts to become more efficient and reduce costs, final prices remain high due to the tax burden.
This is not limited to Colombia alone. It is worth noting that the International Air Transport Association (IATA) recently announced that Mexico has the highest airport fees in Latin America.
In this regard, Roberto Alvo, CEO of LATAM Airlines , highlighted the importance of taking action to offer better services in the face of imminent growth in the industry.
“When you look at the next frontier for your operations, there is a lot of room to grow in this under-penetrated region. We grew 3.6x in the industry over the last 20 years; why couldn’t we do it again in the next 20?” he said.
On the other hand, Federico Pedreira also highlighted that “ we are seeing many opportunities, such as reopening destinations and launching new routes. For example, we are starting to fly to Georgetown for the first time.”
He added that there is also a huge opportunity in the Caribbean. 80% of tourists in the Bahamas come from North America, but only 5-7% from Latin America , even though the latter has much greater potential,” he said.
In the Caribbean, where aviation is essential for mobility and tourism, high infrastructure costs and a lack of economies of scale have hampered growth, the experts said.
“In the Caribbean, a country like the Bahamas has 18 international airports for just 400,000 people. This represents a financial challenge, as without taxes, it is difficult to maintain the infrastructure,” explained Tracy Cooper, CEO of Bahamas Air .
Cooper also stressed that “in the United States we have done a great job collaborating with the authorities to address the problem of illegal immigration, which is a complex challenge. But I think the conversation must continue; we must consider how these situations affect us and how we can work together.”
For his part, Pedro Heilbron, CEO of Copa Airlines , pointed out that another strategy that is gaining ground is the “stop over” program in Panama, designed to boost tourism in the country by actively participating in the aviation industry.
“It is important that Latin American markets are predictable. Although we are seeing growth, we need to be prepared for a slowdown,” he said.
Industry challenges: conflicts and need for cooperation
In Brazil, one of the problems affecting airlines is the numerous legal proceedings filed by passengers.
“In São Paulo, one in every thousand passengers sues the airline, but there are states where the figure is one in every 20 passengers,” said John Rodgerson, CEO of Azul .
This situation has led some airlines to reconsider their routes in certain regions.
For example, Rodgerson explained that Azul has faced legal issues due to public perception, so “ if we want more flights and tourism, we need to have an open conversation about the challenges of the industry. Cities with lower costs and fares will get more traffic ,” he said.
The executive also added that the industry needs to find creative solutions and work together with its partners.
As airlines face increasing challenges in infrastructure, costs and demands, executives are stressing the importance of collaboration between the private sector and governments.
“We are not going to solve infrastructure problems in Latin America alone. We need to work hand in hand with governments and authorities to find sustainable solutions that benefit everyone,” said Federico Pedreira.
Pedreira emphasized that “at Avianca, we are working with governments and airports to improve infrastructure in Latin America. When we collaborate with authorities, we manage to open new routes. This type of collaboration is key to addressing infrastructure challenges.”
For his part, Pedro Heilbron, CEO of Copa Airlines, commented on the trends that will impact the sector in the coming years: “Regions with policies that attract investment and reduce taxes will perform better. An example is Cartagena, where the reduction of taxes generated rapid growth in traffic. This flexibility is essential for the sector, especially in periods of recovery.”
Roberto Alvo also pointed out that discussions about the industry must include the reality of local communities and their ability to access these services,” emphasizing the need for a balanced approach that considers the particularities of the region.
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