Less fees, more passengers
Panama, August 28, 2019 – Air transport is one of the most efficient and safe means of transport. However, there are still challenges that difficult its development.
One of the greatest challenges the industry faces in Latin America and the Caribbean is costs – particularly jet fuel that accounts for about 30 percent of operating costs, and taxes and fees that make operation more expensive and discourage, to some extent, the ability to increase the competitiveness of destinations and turn the region into a tourism power.
For this reason, today we celebrate with the launch of a new ALTAclip, the industry – governments’ joint work to implement fee reduction measures that positively and immediately impact the development of the industry, the growth in passenger traffic and number of flights, as well as the development of businesses related to the travel and tourism sector.
In September 2018, the government of Chile decreed a 20 percent reduction in boarding taxes for domestic flights and a 13 percent reduction in taxes for international flights. This measure led to fast results with the opening of six new routes between September 2018 and June 2019, and an accumulated growth of 17.5 percent in domestic traffic compared to the September 2017 – June 2018 period.
This is equivalent to over 6,100 additional passengers moving daily in Chile’s airports, positioning the country as one of the markets with the highest domestic growth globally in 2019.
Demand in the aviation industry is highly sensitive to price variations, especially for tourism passengers. Tourists have multiple destination options to choose from and the decision is based largely on the price variable. In July 2019, Chile applied a second tax reduction, including an additional 10 percent in domestic taxes and an additional 3.8 percent in international taxes.
“I have no doubt that we will continue to see impressive development in the Chilean commercial aviation market. These measures are extremely positive, directly increase access to air transport and allow more people the opportunity to fly, which in turn, contributes directly and indirectly to the economic and social development of the country through the aviation catalytic effect, allowing tourism and infrastructure growth, job creation and more opportunities,” commented Luis Felipe de Oliveira, ALTA’s Executive Director and CEO.
Colombia also has a highly successful case of reducing airport taxes. In 2015, Cartagena International Airport reduced the international boarding tax from USD $92 to USD $38. As a result of this measure, in 2015, international passenger traffic in Cartagena grew by 30 percent. In 2016, it grew by 21 percent, by 20 percent in 2017, 41 percent in 2018 and 11 percent over the course of 2019. Cartagena International Airport doubled its international traffic over a period of three years and improved the connectivity of the city as, since 2015, five new carriers started international operations in Cartagena and three new routes that previously did not exist were inaugurated (AMS, LIM, and ATL).
“At ALTA, we celebrate initiatives with a global and long-term perspective for the sustainable development of the aviation industry and for the benefit of more passengers. Passenger traffic growth generates greater demand for food and beverage provision services, accommodation services and other tourism services, which in turn generate taxes, jobs, and economic and social development. For each job generated in aviation, four additional jobs are generated. As an association, we continue to work hand in hand with industry and governments to identify opportunities to optimize costs, generate greater possibilities for air transport users and support the economic and social development of our countries,” ALTA’s Executive Director said.
Access the video here: https://twitter.com/ALTA_aero/status/1166733624550600706
ALTA is a private non-profit association serving the airline industry whose objective is to develop a safer, more efficient, and sustainable aviation in Latin America and the Caribbean. ALTA coordinates collaborative efforts throughout the entire value chain maximizing the impact that aviation has on the economic and social growth of the region for the benefit of industry, nations, and populations served by air transport.
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