The International Air Transport Association (IATA) is going to battle with the governments of Latin American countries over their imposition of hefty taxes on the aviation industry, which is posing a serious threat.

IATA, which supports the aviation industry with global standards for airline safety, security, efficiency and sustainability is urging Latin American governments to change their attitudes toward the industry, warning that the rising airfare could make air travel unaffordable for many people in the region.

The airline trade association, which was founded in 1945, is encouraging the governments in the region to modernise their infrastructure and stop imposing hefty taxes on the aviation sector.

IATA Regional Vice President, Peter Cerda told a recent briefing that some governments in the region see the industry as a “cash cow”, arguing that increased taxes and the COVID-related testing and restrictions are pushing airfares higher and even higher.

Cerda reported that the industry has lost money over the past few years and has become uncompetitive because governments have continued to impose barriers.

Higher ticket prices in Latin American countries not surprising

Prices for national travel within the US saw a five per cent hike during the first half of 2020, given a sharp reduction in capacity aided and abetted by rising fuel prices. In this context, rising air travel costs in Latin America are hardly unexpected.

Latest data from IATA shows a sharp decline in airline traffic in 2020. International passenger demand was down 75.6 per cent below 2019, as countries began closing their borders, governments imposed lockdowns and consumers avoided air travel on grounds of safety as a result of the COVID-19 pandemic.

Domestic demand nose-dived last year, falling by as much as 48.8 per cent in comparison to the previous year in 2019 with the impact devastating the region’s airlines. Several airline companies were forced to file for bankruptcy protection, including Mexico’s flag carrier, Aeroméxico, as well as Colombian flag carrier, Avianca.

Avianca reported that its bankruptcy filing was forced by an income drop of 80 per cent in the first few months of the pandemic as its entire fleet was grounded. In Latin America, some 33 per cent of countries still have some kind of quarantine measures in place.

Mexico is the only country in the region that did not restrict air travel at any point during the pandemic while some countries such as Trinidad and Tobago, have yet to fully open their borders.

Rapid fall-off in airline business

Prior to the pandemic, the aviation industry contributed US$167 billion to the region’s Gross Domestic Product, in addition to supporting more than 7 million jobs. This figure has been reduced by a staggering US$77 billion based on the latest figures coming out of IATA.

In a statement released to the media, IATA declared, “Latin American and Caribbean governments remain the least supportive of aviation”,  claiming these countries have refused to bail out their airlines.