CEOs of Latin American low-cost airlines put forward alternatives to improve the region’s competitiveness
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), the executives highlighted the importance of having intelligent 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 their experiences on how some government actions have boosted the airline industry, while others have slowed it down.
Eduardo Lombana, CEO of Wingo, explained that the reduction of the airport tax, from US to less than US, in Cartagena boosted 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, the return to 19% VAT caused airline bookings to contract.
“I think we have a task and a long way to go. We must continue to sell aviation to our governments as a social energizer. The great contribution of aviation is that it makes it possible for small businesses and entrepreneurs to access air transportation and visit places they never thought of visiting before,” said Lombana.
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Wingo’s CEO stated the need to undertake an initiative as a guild to take a step ahead of the Montreal Agreement (concluded 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 to make this issue of passenger rights and duties 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”.
José Ignacio Dougnac, CEO of Sky Airline, explained that in 2018 a significant reduction in airport taxes on the Santiago-Mendoza route, achieved through an agreement with the governments of Argentina and Chile, significantly increased traffic between those destinations, generating higher tax revenues and opening up business opportunities between the two cities.
“We could think about doing this by integrating Latin America much more into their economies. I think there are great opportunities if we can have a long-term vision and a state vision, to develop aviation similar to what countries in Europe have today”.
Dougnac said that the region and the aviation sector require the promotion of policies that transcend the governments in power. “We have to try to work with the States, not with the governments that are in power at the moment, to have a policy that allows us to move forward in the long term towards an aviation that gives people access to be able to really transport themselves”.
He also stressed the importance of making appropriate investments in airport infrastructure.
“If we make the right investments we are definitely going to be for the benefit of the consumers, for the connectivity of the countries, for the economies, for the generation of resources for the economies themselves. So, having a long-term vision and getting a good public-private coordination can make all the difference in 15 to 20 years. In Latin America there is a tremendous potential to be able to strongly develop not only tourism, but also business between LA countries, which today is much more complex than business between European countries”.
Aviation is a necessity, not a luxury
Mauricio Sana, CEO of Flybondi, expressed that in the case of Argentina they are working to demonstrate that it is possible to dynamize the economy and the aviation industry based on passenger volume.
He added that in regions such as Latin America, which has three very strong mountain ranges that make ground transportation difficult, aviation becomes a necessity, not a privilege. “In Flybondi we are trying to get out of that framing where aviation is tourism, tourism is part of air transportation, we are working hard with that and that has made 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 it makes us start to listen to each other; that is where the model of the future that we achieved goes.”
Flybondi’s CEO highlighted that the airline works on inclusion, which has resulted in more than 4 million people flying for the first time, especially entrepreneurs and representatives of small businesses. With pride, Sana highlights that half of these more than 4 million passengers have flown for the first time with Flybondi.
Open skies
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 to have more competition, to break down the barriers that don’t 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 that in order to fly in a country we have to have pilots of that nationality. We will all be in favor of regulations that benefit operational 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 start with two or three countries in a bilateral agreement that will allow us to get closer to that point. Today, there are countries in South America where the shipping rate is 5% of the minimum wage and others where it is 49% of the minimum wage”.
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