Aviation industry recommends withdrawing preliminary law project that punishes connecting passengers at Tocumen International Airport with a toll
Panama City – September 2, 2019 – Panama’s aviation industry – represented by the Association of Airlines in Panama (ALAP), the Latin American and Caribbean Air Transport Association (ALTA) and the International Air Transport Association (IATA) – is highly concerned about the preliminary Law Project 150 that creates the “Law of Incentives for Airlines in Panama,” presented to the National Assembly of Panama.
Panama has been successful in taking advantage of its geographical location to position itself as an important hub for multi-modal connections in the region.
This is largely due to its Open Skies policy adopted in 1994 on the competitiveness of Tocumen International Airport and to the investment in airport infrastructure that has allowed the country to have the highest air connectivity in the region.
Panama City has direct flights to 89 destinations, almost twice as many destinations than cities that have five or ten times its population.
Air connectivity, enhanced by a State strategy that recognizes its benefits, has been the main factor driving tourism, regional multinational company headquarters, trade, logistics and foreign investment, among other sectors.
“The proposed tax for connecting passengers will reduce Panama’s competitiveness as a hub, reduce passengers and flights, and will negatively affect tourism and the important economic contributions that aviation generates to the country. The negative effect of this new tax would be greater than any benefit resulting from the subsidy for the airlines,” commented Luis Felipe de Oliveira, ALTA’s Executive Director.
Aviation is one of the main economic engines of Panama. According to a study by Oxford Economics, air transport allows Panama to take advantage of the economic benefits generated by the industry: 238,000 direct and indirect jobs and more than USD $8,500 million in economic contribution. This is equivalent to 14 percent of GDP.
“It is estimated that two thirds of the air sector’s economic contribution to Panama’s economy comes directly from the multiplier effects of the connectivity that is driven by its hub and connecting passengers. A new tax would bring significant economic losses to Panama in all aviation-driven sectors,” said Peter Cerdá, IATA’s Regional Vice President for the Americas.
Due to the highly competitive nature of aviation, it is absolutely essential to maintain competitive costs in face of important air hubs such as Lima, Bogota, Mexico and others that do not have such fees.
“Against this scenario, the country cannot afford to reverse what has been achieved in recent years and lose its competitiveness against other countries in the region,” expressed Freddy Rodriguez, President of ALAP.
Even when this preliminary law project creates a set of incentives for our members, we believe that these would not have the expected result, and, by contrast, would negatively affect the connectivity and competitiveness of the country. For this reason, as representatives of the airlines, we urge the Honorable Deputies of the National Assembly to withdraw the preliminary law project.
As associations, we encourage the working together of industry and authorities responsible for aviation, airports and tourism to lay out the appropriate policies to ensure that aviation remains one of Panama’s development engines.
ALAP / ALTA / IATA
Tel: +1 786 516 0850
Corporate Communications – Latin America
Tel: +1 438 258 3155
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.
Mission, Objectives &
Technical Maintenance & Procurement
Legal and Aeropolitical Affairs
ALTA/IATA Safety Team
Fuel, Air Navigation & Airport Charges