Government Policies Threaten Aviation’s Recovery In The Americas

Recovery from the pandemic will “stagnate” unless there is more cooperation with governments.

Credit: Ocean Driven Media

Governments across the Americas need to “fundamentally change their mindset” and how they collaborate with the aviation industry otherwise the recovery will stall, delegates at Routes Americas 2022 in San Antonio have heard.

Speaking during a panel session on Feb. 15, IATA regional VP for the Americas Peter Cerda urged airlines and airports to work together to demonstrate the economic value aviation brings to economies, particularly given the changing political landscape across parts of Latin America. The sector must also strive to “get a seat at the table” with any new governments set to come into power in 2022.

“We’re going to have to collaborate much smarter than we did before,” Cerda said. “If we’re going to recuperate as an industry, governments cannot continue to over-regulate and over-tax because that will be counterproductive, both for airports, for airlines and most of all, for consumers. Consumers will not get on airplanes, and unfortunately will continue to go by buses in Latin America.”

Cerda said that growth would “stagnate” unless there is a change of attitude by some governments toward the aviation industry, singling out Argentina as an example. In Argentina, the country’s borders closed at the start of the pandemic and tight caps on the number of air passengers allowed to enter remained in place throughout 2021. Additionally, the international departure tax has risen from $51 to $57, on top of extra taxes on ticket sales in the local currency.

“Governments need to recover what they have lost during the last couple of years and the defaulting back to old habits,” Cerda said. “Argentina should learn from its mistakes. A huge number of airlines have not returned and it’s unlikely that many will return. If they do, it certainly won’t be with the same force as in the past.”

Rafael Echevarne, director general of ACI LAC, agreed that government charges and regulatory issues are the biggest challenge to the pandemic recovery across the Americas. He said high taxes are something that airlines and airports must fight together.
“We are going back in time in some markets,” Echevarne said. “Just imagine what it would be like in Latin America if we were to have a market like we have in Europe. We wouldn’t be talking about airport charges or anything like that—we’d be talking about how we could cope with so many passengers.”

As well as government policy, changes to the political landscape across the Americas will have a huge say in the rate of recovery this year and how the market develops in the longer term.

In Chile, leftist former student leader Gabriel Boric has just become the country’s new president, while Costa Rica, Colombia and Brazil are among the countries heading to the polls in 2022 for presidential elections.

In recent years, leadership changes have seen Argentina curtail the liberalization of its aviation industry and Mexico scrap the construction of the $13 billion Texcoco Airport in Mexico City.

“Before the governments are elected, we’re going out to the candidates,” Cerda said. “We’re already sitting with their teams to show them how the industry can help their government to improve economically and socially, because if not, it’s going to be a very long four years for us.”

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