"Easy Votes": IATA Slams Brazil's Consumer Laws and Panama's Proposed Transit Tax
ALTA leaders in Lima state that a lack of stable state policies, high taxes, and poor infrastructure are grounding the region's "gigantic potential."
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Latin American aviation is operating far below its "gigantic potential," held back by a lack of coherent state policies, excessive taxation, and critically saturated airport infrastructure. This was the shared diagnosis from leaders at the Latin American and Caribbean Air Transport Association (ALTA) and IATA during the ALTA AGM & Airline Leaders Forum in Lima, Peru.
Roberto Alvo, CEO of LATAM Airlines Group, highlighted the regional market's immaturity: with only 0.6 trips per capita, the region is at levels comparable to Europe or the United States in the 1990s, despite having a more complex geography that relies heavily on air transport.
Alvo identified the root of the problem as the absence of stable, long-term "State policies" that transcend rotating governments. He cited Chile as a historical success story, a country that achieved double the regional average of passengers per capita thanks to 35 years of consistent policy based on open skies, infrastructure investment, and minimal state intervention.
Argentina was flagged as the quintessential example of wasted potential. "By population and by product, it should be the second-largest air market in South America behind Brazil. And it is not," Alvo stated. He attributed this lag to "very damaging" historical policies like "bandas tarifarias" (fare bands) which, although eliminated, stunted growth for years.
Peter Cerdá, IATA's Regional Vice President for the Americas, added that while recent policies in Argentina are "positive," "flying to Argentina is not cheap." He stressed that the country needs a proactive government vision to boost competitiveness and tourism, which currently only captures 2.8 million air arrivals, in stark contrast to Spain's 77 million or Italy's 44 million.
The Infrastructure Crisis and New Tax Threats
The infrastructure deficit is one of the most urgent bottlenecks. Peter Cerdá revealed a stark figure: 54% of flights in the region take off or land at airports that are congested or severely congested.
This problem is not limited to major hubs. "We have to start looking at secondary airports," Cerdá urged. He warned that many of these airports, often state-owned and with minimal investment, become saturated with just two aircraft on the apron. This weakness limits the growth of primary hubs and prevents the industry from leveraging the potential of new long-range narrow-body aircraft like the A321neo XLR.
Simultaneously, the industry faces new fiscal and regulatory threats. Cerdá sharply criticized a proposal in Panama to impose a 10% tax on transit passengers, warning it "would have a very negative impact" on the Tocumen hub, as passengers would seek cheaper alternatives.
In Brazil, Cerdá noted the industry is facing over 54 proposals for consumer protection laws—which he often described as being for "easy votes" but raising costs—and a potential VAT increase that could "be devastating" and cause a 30% decrease in travel.
Challenges: SAF, Mexico, and Safety
On the decarbonization front, Roberto Alvo was blunt: although it is the industry's biggest challenge, the reality is that "not one drop of SAF" (Sustainable Aviation Fuel) is produced in the region, and there are no approved production projects. He called Brazil's 1% mandate for 2027 "extremely difficult to comply with" and urged a technical debate to balance environmental goals without harming connectivity.
Regarding other regional challenges, Cerdá pointed to the urgent need to modernize the Mexico City International Airport (AICM), which has been operating above capacity for two decades. "It is urgent that the master plan be made public," he demanded.
Finally, regarding the ICAO (International Civil Aviation Organization) safety audit findings in Argentina, Cerdá expressed confidence. He assured that the ANAC (National Civil Aviation Administration) is taking the findings "seriously" and that the industry is working collaboratively, though fully resolving the observations will require time and investment.
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