The FINANCIAL — The International Air Transport Association (IATA) urged governments in Latin America and the Caribbean to maximize the economic and social benefits of aviation. Aviation currently supports 7.2 million jobs and $156 billion in economic activity across the Latin American and Caribbean region. That represents 2.8% of all employment and 3.3% of all GDP in the region.
While these are impressive numbers, aviation’s contribution could be even greater. For example, in the Middle East region, air transport supports 3.3% of all employment and 4.4% of GDP. Achieving the same levels in Latin America would mean another 1.3 million jobs and an additional $52 billion in GDP contribution, said Alexandre de Juniac, IATA’s Director General at the Airline Leaders Forum organized by the Latin American and Caribbean Air Transport Association (ALTA).
Brazil’s jet fuel pricing policy inflates airline costs by $255 million annually
Mexico has a handling fee in the jet fuel pricing formula that adds an extra $45 million per year.
Peru has a tourism promotion tax on tickets, making it a less competitive destination; and its collection of VAT on overflight charges and international tickets adds to the cost burden while contravening ICAO standards.
Barbados recently imposed a $70 per ticket tax for long haul flights and $35 for travel within the Caribbean community making it a more-costly destination.
De Juniac also emphasized the need for adequate infrastructure to support current requirements and future growth. He cited examples of unhelpful infrastructure actions:
In Mexico, it is extremely disappointing that the government intends to cancel the project to build a new international air hub for Mexico City at Texcoco. The economic impact of not constructing a world class hub will be felt in jobs and economic growth. Today’s decision is a setback for the airline industry and the Mexican economy.
In Peru, long delays in constructing a new terminal and runway at Lima have impacted the country’s development as a regional hub.
In Jamaica, the government plans to invest $60 million in funds raised from passenger charges for an unnecessary runway extension at Montego Bay. The money could be better spent on improving the passenger experience at the airport.