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Latin America's Aviation Faces High Taxes, IATA Warns
🇲🇽 Mexico /Economy & Trade

Latin America's Aviation Faces High Taxes, IATA Warns

From El Universal · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Latin America's aviation sector faces significant challenges from high taxes, which account for 29% of airfares, hindering its growth potential.
  • The International Air Transport Association (IATA) urged governments to reduce taxes, arguing they impact passenger affordability and discourage air travel.
  • Countries that have lowered aviation taxes have seen increased demand, while proposed tax hikes in Brazil and Peru could drastically reduce passenger numbers.

Latin America, a region with substantial potential for air travel growth, is being held back by an excessive tax burden, according to the International Air Transport Association (IATA).

The air transport could compete with bus transport in Latin America, but it faces an excessive tax burden and a complex regulatory system.

— Peter CerdáIATA's regional vice president for the Americas, Peter Cerdá, speaking at a press conference in Rio de Janeiro, Brazil.

The association's regional vice president for the Americas, Peter Cerdá, stated that taxes constitute 29% of airfares in Latin America, a figure significantly higher than in Africa, Asia-Pacific, and North America. "Enough with the taxes," Cerdá urged governments, emphasizing that high levies diminish passengers' purchasing power and impede the sector's ability to compete with other transport modes.

That is why we want to send a clear message to the governments here: enough with the taxes. High taxes impact passengers' purchasing power.

— Peter CerdáPeter Cerdá referring to one of the purposes of the 82nd IATA Annual General Meeting in Brazil.

Cerdá highlighted that air travel could rival bus transport in many Latin American countries, where long bus journeys are common. However, unlike buses, which often receive incentives and low taxes, air travel is burdened by high fiscal demands. He argued that airlines could offer competitive fares if not for these elevated taxes, making air travel accessible to more people and fostering sustainable growth.

The biggest challenge for the region is to create a public air transport system. We must change the image that air travel is a mode of transport for the rich and convince governments that it is a perfectly viable mode for the region.

— Peter CerdáThe IATA official discussing the potential of air travel in Latin America.

Concerns were raised about specific tax proposals, such as Brazil's potential Value Added Tax (VAT) on air tickets, which could increase fares by 26% and reduce demand by 30%. Peru also saw a 10% drop in seat availability after an $11.88 tax increase per person. Conversely, countries like Paraguay, Guyana, Barbados, Ecuador, and the Colombian city of Cartagena have experienced increased flight demand after reducing aviation taxes.

That project can reduce demand by 30% in Brazil. With that proposal, it will be impossible to maintain sustainable growth in the short term.

— Peter CerdáThe IATA official warning about a proposed tax increase in Brazil.
DistantNews Editorial

Originally published by El Universal in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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