From "Argentina's Brutal Fees" to the "Green Hypocrisy": An Interview with Holger Paulmann, President, SKY Airline
SKY President Holger Paulmann celebrates the low-cost model's success, but warns its future is threatened. He slams "brutal" Argentine taxes, inefficient airports in Lima and Santiago, and "green hypocrisy" that stifles regional growth.
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Within the framework of the ALTA Airline Leaders Forum that took place this week in Lima, and in the year SKY Airline celebrates a decade since the decision that reconfigured the Southern Cone's air travel map by transforming to the low-cost model, Aviacionline interviewed Holger Paulmann, president of the company. He reflects on a change he defines as a "very good experience" and a "gigantic social impact," responsible for opening air transport to millions of passengers through a drastic reduction in fares.
However, Paulmann warns that this democratization faces several threats. It is no longer about competition, but about the rise in government fees, inefficient infrastructure costs, and a "brutality" of regional taxes that hinder connectivity and jeopardize the progress achieved.
The 2015 revolution: "We lowered the fare to less than half"
The impact of SKY's transformation was immediate and profound. Paulmann recalls that the announcement generated a national stir. "The impact on society was so great that we were the third most searched concept on Google that year [2015] in Chile, after the 'Bono Marzo' (March Bonus) and the Copa América, which was played in Chile and won by Chile," he recounts.
The reason for this interest was clear: the price. "There were many people who had tried flying low-cost in Europe, in the United States... and what they were waiting for was more competitive fares," he explains.
The numbers validate the strategy. Paulmann details that, while in 2014 SKY's average fare for a domestic segment in Chile was 100 dollars, today it stands at approximately 55 dollars. This reduction is even more significant when considering the economic context.
"You have to be aware that in those 10 years since the business model change, inflation in Chile has been 45%. Therefore, the fare, and in dollars it has been a bit more than 30, the fare should have, if we had done nothing, gone from 100 to 130 dollars, and the truth is that it is now at less than half of that," stresses the executive.
This new pricing scheme, he affirms, generates a "gigantic social benefit." He explains that 65% of passengers end up buying tickets below the average cost, "subsidized by the other 35 who are usually people traveling for business, who are buying tickets at the last minute and who want more benefits."
Paulmann highlights that the biggest challenge was achieving this price drop by breaking the industry's usual "trade-offs." "That's the beautiful part," he says, "having been able to... lower the price, but at the same time improve safety standards, modernize the fleet, improve the customer experience, have a better organizational climate. That is... we have done the exact opposite [of sacrificing quality]."
The regulatory threat: fees that suffocate connectivity
Despite the model's success, Paulmann is categorical in pointing out the new obstacles. The main one: regulatory costs and boarding fees.
In Chile, he criticizes that the government did not fulfill its promise to reduce domestic fees (only two of three reduction stages were implemented) and that now "they are looking at the possibility of how to increase taxes."
He warns that the industry cannot absorb these costs: "In the end, if our costs are increased... all that cost increase will sooner or later be passed on to the customer, and unfortunately, the customer ends up paying it."
The problem is exacerbated in Peru, where the high Airport Use Fee (TUA) for international connections, which led SKY to cancel its Lima-Cancún route, is seen by Paulmann as a "myopic" decision.
"Unfortunately, that myopic view that this issue has no impact on Peruvians is very short-sighted, because if the Lima hub is less competitive than the rest of the region's hubs... [it will have] a negative impact not only for Peruvians but also for all passengers in the region who connected through Peru," he states.
Lima: the "pretty" but inefficient hub?
Paulmann deepens his criticism of the Lima hub, asserting that the problem is not just the TUA, but the operational experience. He criticizes that, unlike other hubs like Panama, where an international transit passenger goes "from one gate to the other, direct, without passing any security control," in Lima "they force you to go through the security control. So, that also adds one more barrier."
Regarding the recently opened new Lima airport, although he calls it "very pretty," he points out serious design and capacity flaws. "This airport was supposed to be three times the size of the previous airport and unfortunately it did not grow in the same proportion in gates," he affirms. "There is an issue that, in the end, in terms of capacity, the airport really did not increase significantly."
Furthermore, he criticizes the direct impact on the passenger: "It's the same airport, but the customer takes 15 minutes longer to get to this new airport than to the previous terminal. So, just by having changed the access area to the airport, you ended up adding 10 to 15 minutes of ground travel for the passenger."
'Verba et Facta': the hypocrisy of the "green airport"
The president of SKY also pointed to operational inefficiencies at airports, specifically in Santiago, which generate millions of dollars in fuel costs and unnecessary emissions, contradicting sustainability discourses.
Citing the motto "Verba et Facta" (Words and Deeds), Paulmann criticizes the lack of consistency. "There is goodwill when we talk about the concept of a green airport... [because] it is popular to talk about a green airport... but at the moment of truth, it is super difficult to implement," he points out.
He highlights three clear examples of inefficiency:
Non-optimized approaches: "The 'continuous descent approach' does not exist. The authorities make you do a 'step down approach'... descend to 10,000 feet and maintain... And every time you have to maintain, consumption multiplies by three or four."
Indirect flight routes: "Pilots have to permanently request the possibility of being able to make a direct flight and many times they are not authorized."
Inefficient taxiing: "When you arrive, you know you are going to park in one of the western concourses, they make you land on the eastern runway. So you say, but why are we going to congest the taxiing?"
Paulmann estimates that if airlines, control towers, and airports worked "well as a team," there is an "opportunity to continue lowering emissions by between 5 and 7%" just with operational efficiency, even before starting to use Sustainable Aviation Fuels (SAF).
The security "hole": "drug traffickers can fly freely"
In one of the most critical points of the interview, Paulmann denounced a serious vulnerability in the security system for domestic flights in Chile, resulting from a lack of digitization.
"In Chile, to fly within the country, there is only a physical check of documentation. Criminals can be traveling within Chile on domestic flights, drug traffickers, and nothing happens; they can fly freely," he affirmed.
The risk, he explains, is that the control is merely visual. "They only look to see if the ID matches the boarding pass. There isn't even verification that that boarding pass was actually issued by the airline. That is, people can be entering the restricted area of the airport with a fake boarding pass."
The solution, he insists, is the integration of data between the airline, authorities, and the airport, as happens in other terminals in South America, where the passenger must scan their boarding pass for a turnstile to open. "That, unfortunately, has not happened [in Chile]."
Argentina: correct measures, "brutal" fees
Asked about the Argentine market, Paulmann is optimistic about the direction of the new government ("it has taken a ton of measures that go in the right direction"), but he is relentless regarding its policy on fees.
"There is one thing that is still very restricted, which is precisely the issue of international boarding fees. It's brutal how expensive Argentina is. It is the most expensive country in the region for international fees," he sentenced.
This policy, he asserts, makes high-potential routes (like seasonal ones to Bariloche or Calafate) "marginal." The executive offers a devastating example: a Santiago-Bariloche flight has the same distance as a Santiago-Puerto Montt flight. However, while the domestic flight pays 13 dollars in taxes, the flight to Argentina, adding taxes from both sides, ends up reaching "almost 100 dollars." "It's 13 versus 100. That's the difference, the fees are eight times more expensive," he emphasizes.
Paulmann also criticizes that it is "unfair" for a passenger on a short regional flight to Argentina or Brazil "to pay the same rate as a passenger traveling from Chile to Paris."
The future: regional connectivity or stagnation
For SKY's leader, the first low-cost decade focused on migrating passengers from ground to air. "The bulk of the marginal demand that the model created... the bulk of that has already passed," he admits.
The next big opportunity is in regional connectivity, specifically between secondary cities, which is practically non-existent today. "Here in South America, it practically doesn't exist," he laments.
"Sometimes it happens that if you want to go from a secondary city in Chile to a secondary city in Argentina, for example, from Concepción to Córdoba... it can take you an entire day. It takes you longer than going to Europe to fly what, in reality, could be a direct flight of less than 2 hours," he illustrates.
Paulmann asserts that if the region's international fees were similar to domestic ones, regional traffic "could be tripled in the next 10 years."
Meanwhile, the airline is preparing to receive its first A321XLR aircraft "starting next year" (2026) and seeks to strengthen its alliances, ruling out fifth-freedom routes in Argentina for now in favor of its agreement with Aerolíneas Argentinas. "We are in conversations with them to see if we can resume the codeshare," he revealed.
Ten years after the low-cost bet, SKY's assessment is clear: the model was a resounding social success. However, the next decade will define if that success can be replicated at a regional level. Holger Paulmann's battle is no longer against an obsolete business model, but against a structure of regulatory costs and inefficiencies that threaten to put a ceiling on the democratization of South American skies.
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