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News
Strategy for Profitable Growth in
Latin America
Santiago - The International Air Transport Association (IATA)
announced an industry strategy for profitable growth in Latin American
aviation. “Profitable growth requires that all aviation stakeholders in
Latin America—airlines, airports and infrastructure providers— work with
a common vision to achieve our priorities: safety, security, cost
reduction, environmental responsibility and liberalization,” said
Giovanni Bisignani, IATA’s Director General and CEO in the opening
address of the Wings of Change conference in Santiago, Chile.
“We must build on success. In the past decade the Latin
American industry has been transformed. Today, the region’s financial
results stand out as positive—delivering US$800 million of profit in both
2009 and 2010. This is a remarkable achievement amid one of the biggest
crises that the air transport industry has ever faced. But the success of
the Latin American industry is based on the leadership of a few
countries. Our strategy is to build a solid foundation for future
profitable growth by spreading this success more broadly across the
region,” said Bisignani.
Latin America was the only region to deliver a profit in
2009. This year’s expected regional profit of US$800 million is second
only to the US$900 million profit expected to be realized by Asia-Pacific
carriers. Traffic demand in the region was flat in 2009 but is now
forecast to grow by 12.2% in 2010. This outstrips the industry global
performance of -5.2% in 2009 and +7.3% expected for 2010.
Bisignani outlined specific recommendations on priorities
for Latin American aviation:
Safety:
Latin America aviation had no accidents involving western-built jet
aircraft in 2009 which is an enormous improvement from the 2.6 accidents
per million flights recorded in 2008. “Safety is a constant challenge for
all industry partners. All IATA members are on the registry of the IATA
Operational Safety Audit (IOSA). Thirty-five Latin American carriers are
on the registry (including all 25 IATA members). Five governments in the
region—Brazil, Chile, Costa Rica, Mexico and Panama—have mandated IOSA in
their laws. I encourage governments through LACAC to make Latin America
the first region where both of IATA’s flagship audits—IOSA and the IATA
Safety Audit for Ground Operations—are a mandated standard requirement,”
said Bisignani.
Security:
“The Christmas day attempted terrorist attack was a wake-up call that
security remains an issue for the industry and for governments. In
January, IATA started a high-level dialogue with the US Department of
Homeland Security. The goal was to facilitate the development of
terrorism countermeasures while taking full advantage of industry
expertise. “We must also avoid one-size-fits all solutions. Tomorrow we
will hold a follow-up meeting in Santiago focused on Latin American
issues,” said Bisignani. IATA is already active in Latin American on
security issues. In 2009, IATA worked closely with governments and the
airports in Bogota and Lima to improve security and reduce wait times.
“This year we will work with Caracas, Sao Paulo and San Jose. But the
challenge is to replace this airport-by-airport approach with regional
partnerships that spread best practices,” Bisignani said.
Charges and Taxation:
The Caribbean and Nicaragua recently proposed new tourism taxes. Chile,
Ecuador, Uruguay and Mexico already contravene the Chicago Convention by
taxing international fuel uplift. “Instead of partnerships to keep
costs down, there is a contagion of rising taxes and charges. We
need a reality check. This is a price sensitive business operating on
razor-thin margins. Governments can change with transparency. We must
keep costs low and follow ICAO guidelines,” Bisignani said. A 1% increase
in travel costs drives away 1% of travelers. Increased charges and
taxes put at risk the 700,000 jobs and US$22 billion in economic activity
that aviation supports in Latin America.
Environment:
Latin America will take a leading role in the global response to climate
change as Mexico hosts COP-16 at the end of the year. The aviation
industry (airlines, airports, air navigation service providers and
manufacturers) remains committed to stabilizing emissions with carbon
neutral growth from 2020 and cutting emissions in half by 2050 compared
to 2005. “We can be proud of having targets that are ahead of the
regulators. But as we head towards COP-16, I hope that Latin America can
help lead the way in two critical areas. The first is improving
infrastructure to ensure that our operations are as efficient as
possible. That means resolving importing outstanding issues such as the
joint use of military air space. The region is also in a unique position
to help build consensus between the developed and the developing world on
a global sectoral approach for aviation,” said Bisignani.
Liberalization:
“The Latin American industry has led the way with the development of
cross border brands which have become some of the region’s strongest
players. Now governments must catch-up by liberalizing the bilateral
systems’ archaic restrictions on ownership and market access,” said
Bisignani. In November last year, IATA’s Agenda for Freedom
initiative facilitated a multinational statement of policy principles on
liberalizing ownership, pricing and market access. Chile and Panama were
among the governments that signed the principles, which also included
Malaysia, Singapore, Switzerland, the United Arab Emirates and the United
States of America. Since then, Bahrain, Lebanon and Kuwait have
joined. “The principles are open for any country to sign. I urge
all governments in Latin America to use the principles as a blueprint for
building an even stronger industry,” said Bisignani.
View
Giovanni Bisignani's speech
- IATA -
For more information, please contact:
Anthony Concil
Director Corporate Communications
Tel: +41 22 770 2967
Email: corpcomms@iata.org
Notes for Editors:
- IATA
(International Air Transport Association) represents some 230
airlines comprising 93% of scheduled international air traffic
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