At the Routes Americas conference, Peter Cerda, Regional Vice President, The Americas at the International Air Transport Association (IATA), provided a profound analysis of the aviation industry’s situation in Latin America and the Caribbean.
Cerda touched on topics such as post-pandemic recovery, misalignments with governmental perceptions, the impact of taxation, and infrastructural challenges. Cerda also explored the enormous potential for aviation growth in synergy with the tourism sector.
High Taxes, High Fares
Highlighting the post-pandemic recovery, Cerda pointed out the strong rebound in key markets but contrasted this with the government’s lucrative perception of the industry, stating: «Many times the industry is perceived as a very lucrative. That is very well off.»
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This vision clashes with the reality of the aviation sector, which faces «a very challenging environment». Cerda underscored the detrimental impact of high taxation on the financial front: «On average, airlines are losing around 2.5 dollars per seat when the global average is a profit of 5.4.»
«The last time Latin American airlines made money was in 2017,» he added.
Infrastructure and Regulatory Modernization
The call to modernize regulations and infrastructural improvements was clear, with Cerda emphasizing the need for competitiveness. «We cannot have a single handling agent in Argentina; it has to be open, it has to be competitive,» he urged, highlighting the importance of creating an environment conducive to operational efficiency and growth.
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«Our competition is the bus,» Cerda remarked, detailing the need to make air travel more accessible and attractive to the general population. Meanwhile, tourism presents a fertile ground for expansion, contingent on governments recognizing and prioritizing its potential within their agendas.
Brazil’s Litigious Environment and Government Change in Argentina
The aviation landscape in Brazil is plagued with challenges, notably a litigious culture that significantly burdens operations. Cerda highlighted: «Brazil… is the most litigious country in the world where consumers can easily file a claim against an airline.» This aspect complicates the operational landscape, hindering growth and efficiency.
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On the other hand, the recent governmental change in Argentina marks a positive shift towards engagement and dialogue with the industry. Cerda noticed a significant difference from the past administration, declaring: «During the four years prior, we could not get any meeting with the government, and in two months of the new government, I’ve already had two,» indicating a more open and collaborative stance towards aviation, which he believes, bodes well for the regulatory reform sought in the country and the overall competitiveness of the sector.
