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IATA: key to deliver aviation's benefits in Latin America

Competitiveness, infrastructure and harmonization

The International Air Transport Association (IATA) urged governments in Latin America and the Caribbean to maximize the economic and social benefits of aviation. Aviation currently supports 7.2 million jobs and $156 billion in economic activity across the Latin American and Caribbean region. That represents 2.8% of all employment and 3.3% of all GDP in the region. Alexandre de Juniac, IATA’s Director General said it at the "Airline Leaders Forum" organized by the Latin American and Caribbean Air Transport Association (ALTA). He urged governments to focus on enhancing competitiveness and improving aviation infrastructure, while working toward regulatory harmonization across the region.

Competitiveness

Brazil’s jet fuel pricing policy inflates airline costs by $255 million annually

Mexico has a handling fee in the jet fuel pricing formula that adds an extra $45 million per year.

Peru has a tourism promotion tax on tickets, making it a less competitive destination; and its collection of VAT on overflight charges and international tickets adds to the cost burden while contravening ICAO standards.

Barbados recently imposed a $70 per ticket tax for long haul flights and $35 for travel within the Caribbean community making it a more-costly destination.

Colombia provides a contrasting example.

Infrastructure

The DG also emphasized the need for adequate infrastructure to support current requirements and future growth. He cited examples of unhelpful infrastructure actions:

In Mexico, it is extremely disappointing that the government intends to cancel the project to build a new international air hub for Mexico City at Texcoco. The economic impact of not constructing a world class hub will be felt in jobs and economic growth. This decision is a setback for the airline industry and the Mexican economy.

In Peru, long delays in constructing a new terminal and runway at Lima have impacted the country’s development as a regional hub.

In Jamaica, the government plans to invest $60 million in funds raised from passenger charges for an unnecessary runway extension at Montego Bay. The money could be better spent on improving the passenger experience at the airport.

He noted that there have been some positive developments, including partnering with the Argentine, Aruban and Brazilian authorities to support their efforts to adopt a modern and collaborative approach to airport planning that benefits all stakeholders. He also welcomed the Chilean government’s recent reductions in the airport facility charge that will boost its competitiveness by almost $418 million through 2022, compared to the original charge schedule.

Harmonization

Regulatory harmonization is also essential and recently there have been some positive steps.

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