With politics shifting, the IATA regional vice president for the Americas says governments need to do more post-pandemic to ensure a healthy and competitive aviation marketplace.
Leaders from the International Air Transport Association (IATA) say governments in the Americas need to step up and help the aviation space grow, after airlines provided material support for COVID-19 recovery efforts across the region.
At a media briefing during the 2022 IATA Annual General Meeting in Doha, Qatar, regional vice president for The Americas Peter Cerdá said regional authorities can help the space grow by improving infrastructure, reducing taxes and creating a business-forward environment.
Increased Taxes and Fees Major Part of the Regional Issues – Not Just U.S.
During his media availability, Cerdá noted multiple places across North, Central and South America where airlines were being challenged by fees and tax structures. For example: In the Caribbean, a region which combined with Latin America has seen a 263% growth in air traffic, airlines flying over The Bahamas are paying $51 per 100 nautical miles flying over the airspace. Although the archipelago nation has full control of their airspace, air traffic control is still being managed by the U.S. Federal Aviation Administration.
“Although we serve a purpose, it seems that many of our governments still consider us as an easy cash cow, which is used to refill the state’s coffer,” said Cerdá. “We must, however, work across the entire value chain to ensure that aviation can operate through the most cost competitive environment – and hence, we will not shy away from calling out practices we deem unfair and discriminatory.”
Other parts of the Americas are suffering from critical infrastructure issues. In Mexico City, the IATA remains concerned about capacity issues affecting recovery in the aviation space. Although Felipe Ángeles International Airport opened in March 2022 as an alternate international terminal, Cerdá says the new terminal lacks a ground transportation system to connect the city with the airport. Moreover, only five airlines, including Mexican carriers Aeroméxico and Volaris, utilize the airport. They are calling on the government to give airlines the choice of which airport they would prefer to use.
In Peru, Cerdá says the five-year delay of constructing a new airport in Lima is creating issues for supporting capacity out of the region. For Canada, Cerdá noted that the increase in passenger demand is challenging security resources, both in screening incoming flyers and leaving aircraft on the tarmac for extended hours at Toronto Pearson Airport (YYZ) because of backups at customs.
One of the key issues Cerdá brought up in his talk are regulatory issues across both continents. In the United States, the recovery could be adversely impacted by AT&T and Verizon’s planned expansion of C-Band 5G. Because the FAA is requiring airlines to retrofit and upgrade radio altimeters at their own cost, it could hurt airlines as the project advances.
In Brazil, the organization is backing a presidential veto of a parliamentary bill which would require airlines to offer passengers one free checked bag at minimum. The organization believes that rules similar to this are anti-competitive for the aviation space – especially for ultra-low-cost carriers – as they could be forced to charge all passengers for services they would not use.
“Unfortunately, from Canada, to the U.S., to Latin America, governments have taken the easy approach in obtaining popularity votes,” said Cerdá. “Instead of what’s really important for the traveling public.”
Although Cerdá would not speculate on how much of these taxes and infrastructure costs would be passed down to consumers in the form of higher airfare, he noted that it was “common sense” that it would ultimately affect flyer costs. After the air carriers were instrumental in moving air cargo and medical staff during the COVID-19 pandemic, he is calling on regulators across both continents to work with the industry to find solutions which encourage business to grow while offering the space for new carriers to enter in rapidly growing markets.
“We need our government officials to understand that airlines are not an industry of the rich. Air transportation in our region is an essential public service,” said Cerdá. “Unfortunately, many of the governments in our country do not consider aviation as a public mode of transportation…
“We compete with the busses in most of the countries in the region,” Those buses are not taxed, they don’t have to meet levels of safety, they are not imposed regulatory policies, but the aviation industry is.”
Regional Outlook Mirrors Previous Statements
Cerdá’s comments about regulatory and infrastructure challenges match his outlook and opinions from previous years. In 2018, the executive wrote about the ongoing infrastructure problems in Lima and Mexico City, while calling on governments to step away from “heavy-handed consumer-related regulations” which go against global standards.
Two years later, Cerdá wrote he hoped the spirit of cooperation found during the fight against COVID-19 with regional governments “…will allow for the removal of roadblocks that have in the past stifled the successful development of this sector and often hindered the provision of a good passenger experience.”