More than 300 executives and professionals from the aeronautical sector met this Thursday in Quito on Aviation Day, an event promoted by the International Air Transport Association (IATA), the largest union that groups airlines. The meeting reviewed the market perspectives, issues of competitiveness and sustainability in the industry.
Peter Cerdá, regional vice president for the Americas of IATA, maintains that the event returned to Ecuador after several years because the country is in a proactive moment to improve connectivity. The executive points out that the country has potential, but an important challenge: lower costs and be more attractive to airlines.
Why, after 15 years, did IATA decide to hold Aviation Day in Ecuador again?
It is a market that we are seeing a change in policy, it is turning to travel tourism, it is working to develop connectivity with other countries. A Government that is very proactive in improving connectivity, enhancing its strategic position in the region and in the area of tourism. It was a perfect moment. We see a potential in the development of air transport.
Before the pandemic, Ecuador’s air market was booming. How do you see the recovery in this market?
I think we should be more ambitious. We were on the right track before the pandemic. The sector employed 231,000 jobs, the contribution to the GDP was $3,400 million, what there was at that time in international and domestic connectivity were 48 routes, 24 national and 24 international. When we compare it to other regions, there is a significant challenge at the connectivity level. Colombia, a larger country, has connectivity with 81 cities, Peru has 38 and Ecuador 24, there is room for growth. The country has special characteristics for tourism.
How are the recovery levels of passenger traffic?
If we look at connectivity, which is related to passengers, before the pandemic there were 48 routes, today there are 36, of which 20 international routes have recovered from the 24. It has been important to work with the Ecuadorian government. The country was the first to reopen the borders, the connectivity with the protocols. As a result, the recovery has been coming faster than other countries.
The Government dismantled the foreign exchange exit tax (ISD) paid by airlines. What other measure do you think Ecuador lacks to attract more airlines?
The issue of costs is important to be addressed, competitiveness. To attract new airlines and to meet the goal of attracting 2 million tourists, you have to be competitive. The price of the trip is important, traveling to the country is expensive. If you look at a ticket from Guayaquil or Quito to the United States, 45% of the fare corresponds to fees and taxes. When you look at the global level, that percentage is high. Airport, tourism, municipal costs must be reduced, they must be made more attractive. The country must establish lower costs than neighboring countries in order to attract.
And at the level of the region, how high are the costs in Ecuador?
If you look at airport costs, overflight costs, landing costs are among the highest you have and there you must work to be more competitive. We must find dynamics that allow us to lower prices, attract more flights, more passengers.
Ecuador is signing open skies agreements with other countries. What immediate or long-term effects can the country have? What is the result that the countries have?
It is much more flexible, controls on the number of flights, frequencies, destinations no longer apply. What it allows is for the market to develop, even promoting regional flights. More lines could operate to other cities, which will allow traffic to increase. It is an important step, but the lines evaluate the cost of operating. The lines want to operate, they want to invest, but they want to make sure that entering a destination means a long-range relationship.
Given its conditions, what can Ecuador aspire to: regional flights, a connection point?
Right now there is a lot of competition in the northwestern part of the continent. There’s a hub strong in Lima, Bogotá and Panama. So there is a saturation of distribution centers in this part of the region. Our recommendation in the Ecuadorian case is to promote interregional and international connectivity. Increase the connection points with North America, in Latin America and strengthen the domestic network.
The pandemic has changed the business model of airlines. What is the trend?
Today there are many models, the traditional, the hybrid, low cost… and that is good for the consumer, since he decides on his experience. The good thing that is happening in the region is that more consumers travel. (I)
Source: Eluniverso
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