Effective aviation policies could bring significant economic gains for Latin America and the Caribbean

IATA urged governments in Latin America and the Caribbean to work with the air transport industry to ensure infrastructure development unlocks aviation’s economic and social benefits. 

Passenger demand in Latin America and the Caribbean is expected to more than double from 298 million in 2015 to 658 million in 2035. If that demand is met, the number of jobs supported by aviation in the region will grow from 5.4 million to 8.4 million over the same period. And aviation’s contribution to regional GDP will increase from $176 billion to $380 billion.

Speaking at the Latin American and Caribbean Air Transport Association (ALTA) Airline Leadership Forum in Mexico City, Alexandre de Juniac, IATA’s Director General and CEO noted that operational costs, high taxes, and regulations not aligned with global standards puts those benefits in doubt.

But he paid particular attention to “the huge opportunity for a government-industry partnership to create value by addressing the region’s many infrastructure deficiencies.” 

Capacity must grow in line with demand. Congestion in Bogotá, Lima and Mexico City illustrate the region’s airport capacity crunch. Though there are plans to develop each of these hubs, the improvements will not come online quickly enough, costing jobs and economic growth.

And Argentina, which ranks 114 out of 141 countries for the quality of its air transport infrastructure, needs an urgent overhaul of its antiquated and costly air navigation system.

“The key is consultation,” said de Juniac. “Airlines, governments, and airport operators need to be partners in building successful, cost-efficient infrastructure in line with market realities on cost and capacity.” 

The IATA Director General also sounded a cautionary note on airport privatization. “Harnessing the efficiencies of private enterprise to improve infrastructure needs iron-clad regulation to protect the users from out-of-control monopolies,” he said.

Governments should award infrastructure concessions based on the long-term national interest of unlocking the benefits of growing connectivity—and not the short-term gain of those coming with the highest bid. 

Regulations surrounding Santiago’s development are not robust enough, for example, even though Chile has got so much right in building a competitive air transport industry. “Pre-funding airport expansion plans at Santiago’s airport has seen airport charges skyrocket, putting at risk the country’s air transport competitiveness and the social and economic benefits it generates,” said de Juniac.