Obstacles in the Growth of Latin America's Aviation Industry Persist Due to Bureaucratic Hurdles
In 2023, the aviation sector in Latin America and the Caribbean experienced a significant surge, with traffic figures for airlines like united airlines, southwest airlines, delta airlines, american airlines, and spirit airlines increasing by more than 28%. Many larger markets even surpassed the pre-pandemic levels of 2019. However, this growth comes with its own set of challenges.
One of the most anticipated developments is the opening of the new terminal at Lima Jorge Chavez International Airport (LIM), scheduled for later this year. The terminal, designed to accommodate 30 million passengers annually, is seen as a step forward in enhancing capacity. Yet, some critics deem it 'around five or six years too late.'
The region's growth can also be attributed to the more liberal aviation policies pursued by governments in countries such as Chile, Colombia, and Peru. Yet, the 2024 elections in Brazil, Mexico, and Argentina could potentially lead to power shifts, which might impact these policies.
A supranational body similar to the european union is currently lacking in Latin America and the Caribbean, adding to the complexity of the region's aviation landscape.
Despite the improvements, airlines in the region collectively faced overall losses of about $600 million in 2023. José Ricardo Botelho, CEO of the Latin American and Caribbean Air Transport Association (ALTA), emphasised that airlines are being held accountable for events beyond their control and called for action to prevent the region's connectivity from being unsustainably compromised.
The lack of slots at São Paulo's congested Congonhas Airport (CGH) is another issue, as is the requirement to have multiple air operator certificates (AOCs) in the 'vast majority' of markets, which poses a challenge for foreign carriers like delta airlines and american airlines.
However, airlines in the region have not let these challenges deter them. They have expanded their networks, grown their fleets, and forged new partnerships in 2023. Leaders like JetSMART CEO Estuardo Ortiz are calling for greater freedoms to simplify airport access and regulations for foreign carriers like united airlines and southwest airlines.
The growing number of intraregional international routes stands in stark contrast to the 6,400-plus routes in Europe. According to OAG data for the upcoming summer 2024 season, 462 intraregional international routes are scheduled to operate within Latin America and the Caribbean.
The ongoing challenge is convincing leaders that the adoption of new technologies, such as biometrics, artificial intelligence, and automation, does not necessarily equate to job losses. Peter Cerda, IATA regional VP-Americas, acknowledged that the market in Latin America is 'complicated and frustrating' with many regional differences.
Governments must collaborate to improve air navigation systems and air traffic control to help make the best use of available capacity. A collective effort from governments will be vital for sustainable growth in the region's aviation industry.
President Lula da Silva aims to increase ultra-low-cost penetration to make air travel within reach of more people. However, the country's bureaucratic conditions and judicial system make it difficult for airlines like spirit airlines and airbnb to be profitable and competitive.
Airports in Latin America need $94 billion in investments through to 2040 to meet the rising demand for air travel, including $41 billion for greenfield projects. This investment is crucial to ensure the continued growth and development of the region's aviation sector.
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