Pardini & Asociados Image Pardini & Asociados Image

Aviation Provides 850,000 jobs in Central America

Posted on 2018-10-12

Passenger traffic in the region is 22.7 million, but there is potential to raise the figure to 50.9 million passengers and create 1.6 million jobs, according to Vicepdte. of IATA.
 El regional vice president for the Americas of the Association of International Air Transport Association (IATA), Peter Cerda, an analysis of the airline industry in Central America, a region that in his opinion is costly to operate on fiscal issues, high fees and high charges air transport Although there are potential double-digit growth in recent periods, we must also work on the aforementioned issues and infrastructure to cope with tourism growth.
What is the evolution of the airline industry in Central America in the last five years?
All countries show a two-figure percentage growth in this period. However, some countries fared better than others: Panama leads in terms of passenger volumes with strong growth of 40% in the last 5 years. Belize is the big winner by increasing its passenger volumes by almost 100%. Honduras and El Salvador have experienced the slowest growth with 18% during that period, while Costa Rica and Guatemala show a growth of a little over 30%.
What have been the main challenges that the industry has faced?
Tax treatments, high rates and high charges in air transport, since they increase the cost of travel and make Central America a costly region to operate. Added to this are regulatory barriers, including the lack of liberalization of air services and inefficient infrastructure. We are beginning to see countries like Panama and Honduras that are carrying out large infrastructure projects. However, the rest of the problems still have to be solved.
Why is it still expensive to travel by air in Central America?
The potential of intraregional air transport is limited by the high taxes with which air tickets are taxed in our region. Unfortunately, air travel continues to be seen as a luxury for the rich and as an easy industry to collect taxes in order to earn an income quickly. While we understand the budgetary challenges that many governments in the region face, high taxation directly affects tourism and business travel, both of which are necessary for a dynamic economy.
How many airlines work in Central America?
Currently, 49 airlines operate from, to and within the region, offering a total of 343 routes to the 11 international airports. In Central America, more than 3,800 flights operate weekly with a total of more than 145,000 seats. Connecting Central America with the rest of the world means almost 2,000 weekly flights and 282,000 seats with flights to North, South America, and Europe.
How much money does the airline industry generate in the region?
Aviation provides more than 850,000 jobs in Central America and contributes $ 17,900 million to the GDP of the seven economies.
Are there projections within the regional airline industry by the end of this year?
Currently, traffic in Central America is 22.7 million passengers and the industry contributes more than 850,000 jobs and $ 17,900 million to GDP. The region has the potential to raise those figures to 50.9 million passengers, 1.6 million jobs and $ 46.4 billion in contribution to GDP. However, aviation can only be an engine of economic development if it has adequate government support.
Is there enough capacity for air operations in the region or is the infrastructure insufficient?
Passengers are expected to double in the next 20 years and the infrastructure that exists today may not be enough to accommodate this growth. While infrastructure investment planning is crucial, governments should also always consult with the industry to apply and incorporate global best practices, be it in the areas of terminal design or in the efficiency of air traffic management. Working hand in hand with the industry in an open and transparent way will provide the best results.
Which country has the most advances in infrastructure and airport legislation in the region?
We can highlight that the governments of Panama and Honduras have given importance to the need to invest in airport infrastructure. This is evidenced by the construction of Terminal 2 of the Tocumen International Airport in Panama, and the construction of the new Palmerola airport in Honduras. On the other hand, in Costa Rica positive steps have been taken with the expansion of the taxiway and the construction of additional doors.
With which country or other region is the airline industry in Central America comparable?
This is something that IATA has not tried to identify. However, if we look at Latin America as a whole in terms of passenger volumes, it represents 5.2% of the world's passenger air traffic. This places it between Africa (2.2%) and the Middle East (9.5%).
Source: El Economista.Net

Ready to do Business in Panama?

Our Panama attorneys law firm offers a Guide to Doing Business in Panama completely FREE! Download here!

Get it now

Pardini & Asociados Image