The top representatives of JetSMART, Sky Airline, Wingo and Flybondi agreed that aviation is a necessity, not a luxury and that it contributes to boosting countries’ economies and generating more inclusion. During the nineteenth edition of the ALTA AGM & Airline Leaders Forum, organized by the Latin American and Caribbean Association (ALTA), executives highlighted the importance of smart regulations.
The panel moderated by Emilio Romano, CEO of Bank of America Mexico, included the participation of Estuardo Ortiz, CEO of JetSMART; José Ignacio Dougnac, CEO of Sky Airline, Eduardo Lombana, CEO of Wingo and Mauricio Sana, CEO of Flybondi, who shared from their experiences how some government actions have energized the airline sector, while others have slowed it down.
Eduardo Lombana, CEO of Wingo, explained that the reduction of the airport tax, from US$98 to less than US$40, in Cartagena skyrocketed tourism in the city and when Colombia decided to lower the Value Added Tax (VAT) on tickets, from 19% to 5%, it became one of the countries that recovered the fastest after the pandemic. achieving 48 million passengers. However, by returning to 19% VAT, it caused air bookings to contract.
READ: Rolls-Royce joins ALTA
“I think we have a long way to go. We must continue to sell aviation to our rulers as a social dynamizer. The great contribution of aviation is that it makes it possible for small businesses and entrepreneurs to access air transport and visit places they did not think of visiting before,” said Lombana.
The CEO of Wingo raised the need for the union to undertake an initiative that allows us to take a step forward with what was achieved with the Montreal Agreement (signed on May 28, 1999, for the protection of passengers, baggage and cargo on international flights), which unifies regulations related to passengers.
“I think we have to start looking at how we make this issue of passenger duties and rights much more homogeneous, which in Latin America is doing us so much harm, we have so many regulatory differences between countries that really, in the end, what they do is slow down the industry.”
For his part, José Ignacio Dougnac, CEO of Sky Airline, explained that in 2018 a significant reduction in airport taxes on the Santiago and Mendoza route, achieved through an agreement with the governments of Argentina and Chile, significantly increased traffic between these destinations, generating greater tax revenues and opening business opportunities between both cities.
“We could think about doing this by integrating Latin America much more into its economies. I think there are great opportunities if we manage to have a long-term vision and a vision of the State, to develop aviation similar to what countries have today in Europe.”
Dougnac said that the region and the airline sector require the promotion of policies that transcend the governments of the day. “We have to try to work with the states, not with the governments that are currently governing, to have a policy that allows us to move forward in the long term towards aviation that gives people access to actually be able to transport.”
He also stressed the importance of making the right investments in airport infrastructure.
“If we make the right investments, we will definitely go in favor of consumers, in favor of the connectivity of countries, of economies, of the generation of resources for the economies themselves. So, having a long-term vision and getting good public-private coordination can make all the difference in 15 to 20 years. In Latin America there is tremendous potential to be able to develop very strongly not only tourism, but also business between Latin American countries, which today have a much greater complexity than business between European countries.”
Aviation is a necessity, not a luxury
Mauricio Sana, CEO of Flybondi, said that in the case of Argentina they are working to demonstrate that it is possible to boost the economy and the aviation industry based on the volume of passengers.
He added that in regions such as Latin America, which has three very strong mountain ranges that make land transportation difficult, aviation becomes a necessity, not a privilege. “At Flybondi we are trying to get out of that framework where aviation is tourism, tourism is part of air transport, we are working hard with that and that has meant that, in the midst of a lot of difficulties, we are making a little more contribution, a little more contribution to the regulation of governments, to the provinces, to the economies and makes us start to listen to each other; That’s the model of the future that we achieved.”
The CEO of Flybondi highlighted that the airline works on inclusion, which has resulted in more than 4 million people being able to fly for the first time, especially entrepreneurs and representatives of small businesses. Sana proudly points out that half of those more than 4 million passengers have flown for the first time with Flybondi.
Estuardo Ortiz, CEO of JetSMART, highlighted the importance of open skies.
“If the plan is to make more regulations to improve competitiveness, I think the first thing is for there to be more competition, to break down the barriers that do not allow you as an operator in country A, to operate as a domestic operator in country B. Open skies should have been signed a long time ago in the region. We are still in the situation where in order to fly in a country we have to have pilots of that nationality. We’re all going to be in favor of regulation that benefits safety, but those regulations in today’s global world, where you want access to human capital, I really think they limit us a lot; also the possibility of still having to deal with bilaterals.”
Ortiz proposed that ambitious public-private projects be proposed in each country. “We may not be able to homogenize everything, but at least we can start with two or three countries in a bilateral agreement that allows us to get closer to that point. Today, there are countries in South America where the boarding fee is 5% of the minimum wage and others where it is 49% of the minimum wage.”