Government relations remain key challenge for airlines across the Americas

It’s nothing new that the Americas region, particularly across Latin America and the Caribbean, struggles with limited aviation infrastructure, poor government relations and excessive taxation. But how must this change to better the region as a whole?

Throughout 2016, associations like IATA are working towards a fairer and improved economy within the region and Peter Cerda, Regional Vice President for Americas at IATA, explained to Routesonline just ahead of this year’s Routes Americas why airlines and governments must work closer together.

“I think one of the things we as an industry need to do better, and this is one of our strategic objectives we have in IATA, is to work with others to convey the value of aviation to our governments in the region.

“Unfortunately, many governments in the Americas regions still consider aviation as an industry of the rich and it’s an easy cash cow to pull money from us. Instead of seeing aviation as an enabler that helps stimulate the economic market, that brings families together, that expands different cultures and permits businesses to grow.

“We need to make them have us or see us as a business partner, rather than an industry that simply transports people back and forth.”

Peter Cerda will be participating in the Airline Leaders Panel at this year’s Routes Americas Strategy Summit, being hosted in San Juan, Puerto Rico between 17th – 19th February.

Despite this, airlines and passengers also face further problems related to the infrastructure – another reason why working side by side with governments is vital for success. “Air transport is permitting our very big earth to become a much smaller globe” explained Cerda.

“If you look at Latin America, it’s a vast area of territory and it does not have the type of transportation infrastructure that Europe of North America has; we don’t have good rail systems and the roads are very challenging.

“We need to make sure, and this is from both a passengers and cargo side, that the right infrastructure is in place and we have a suitable airport at a reasonable price producing a good service to customers.

“We also need governments to do a better job of not over-regulating the industry.”

As well as being heavily regulated, governments are enforcing cripplingly taxes within the region, which leads consumers to choose to fly elsewhere. “The biggest challenge in the Caribbean is taxation,” said Cerda.

“While travelling people or governments might think ‘well we’re just adding $1 to the ticket is nothing’, they don’t take into consideration that above that $1 taxes, there are many other that are being applied.

“It becomes very costly to operate in the Caribbean and it is a highly competitive market with many Island states and that makes it an injustice to that part of the world, because when it becomes so highly over-taxed consumers look to go elsewhere.

“Today, with the new aircraft that are flying around the world the consumer has a much larger variety to choose from. You could be in Miami and thirteen hours later you’re in Doha connecting to go to the Maldives, while it may be a bit further it’s cheaper than going to the Caribbean which is only two hours away.

“Connectivity has permitted the consumer now to choose based on price, services, where they want to go, and in the case of the Caribbean, we’re really encouraging our governments that they need to be mindful of that as they might outprice themselves due to the unwarranted taxations.”