"It Would Be a Great Mistake": Latin American Airline CEOs Warn Peru Against New Transit Tax
At ALTA forum, leaders from LATAM, Copa, Avianca, JetSMART, and SKY also sound alarm on "unprecedented" engine crisis grounding hundreds of jets and "unrealistic" decarbonization mandates.
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In a candid and at-times fiery discussion, the heads of Latin America’s largest airlines issued a stark warning to Peru, arguing that a proposed tax on transit passengers would be a "great mistake" that would cripple Lima’s potential as a regional hub and "promote other hubs" instead.
The panel of CEOs, gathered at the ALTA AGM & Airline Leaders Forum 2025 in Lima, also painted a dire picture of an "unprecedented" engine supply chain crisis that has grounded hundreds of aircraft across the region—a problem one CEO warned would last for "at least five years". The leaders also tackled the gap between decarbonization goals and the on-the-ground reality, stating there is not a single viable Sustainable Aviation Fuel (SAF) project ready in Latin America.
The discussion, moderated by journalist Gabriela Frias, featured Pedro Heilbron of Copa Airlines, Roberto Alvo of LATAM, Estuardo Ortiz of JetSMART, Frederico Pedreira of Avianca, and Holger Paulmann of SKY Airline.
‘They Have the Fireworks Ready’
The most immediate flashpoint was the proposed Peruvian tax on transit passengers. Pedro Heilbron, CEO of Copa Airlines, whose Panama hub would be a direct beneficiary of a less competitive Lima, began with sarcasm.
"We are pushing with all our energy for Peru to impose it," Heilbron joked, to laughter from the audience. "Colombia is also pushing. El Salvador, and others... they have the fireworks ready to launch that day".
Dropping the sarcasm, Heilbron explained that a hub must be "efficient and competitive." A tax on transit passengers "is the opposite of what will promote connectivity," he warned. "Whoever puts a tax or restriction on these transit passengers is promoting other hubs. And more than other hubs, there are many airlines, like JetSMART, like SKY, that fly direct, avoiding the hubs. They benefit even more... it would be a great mistake for Lima to restrict connectivity".
Holger Paulmann of SKY Airline confirmed the damage was already being done. He said SKY had been "looking at... semi-connections" and "saw Lima as a potential relevant hub". When Frias noted he spoke in the past tense, Paulmann was blunt: "Obviously... the airport is less competitive now than the rest of the airports in the area... one of the opportunities was to put [new aircraft] in Lima and now other airports are becoming more attractive".
Estuardo Ortiz, CEO of JetSMART, broadened the critique to the region's entire fee structure, noting that taxes and fees can constitute the majority of a ticket’s cost. He pointed out that while "our fares at JetSMART... start from $10 one way... the passenger ends up paying 60, 70, 80% in taxes and fees".
Avianca’s CEO, Frederico Pedreira, echoed this, citing cases where "two-thirds of the ticket price are taxes and fees".
Roberto Alvo, CEO of LATAM, called the situation a product of "such short-sighted public policies". "Peru still hasn't recovered the number of international passengers from 2019... And here we are, imposing a cost that will slow... tourism," he said, adding that the airport concessionaire already profits from these passengers. "We are charging them twice".
‘A Problem That Will Last 5 Years’
The panel then shifted to the severe operational crisis caused by engine supply chain failures, which have left airlines scrambling.
"It impressed me," Frias said. "600 airplanes on the ground in the world. In Latin America, how many? This is an issue without precedent".
"I was just doing the math," replied Alvo. "The region operates... about 1,000... aircraft. We're talking about what's on the ground... is like 60% of all that move in the region... It's tremendous". He attributed the crisis to "technology... launched before its time," with airlines as the "victims."
His prognosis was bleak. "We have to be... realistic," he urged. "This is a problem that's going to last... probably until the end of the decade... 5 years".
The CEOs then began comparing their grim statistics, underscoring the "democratic" nature of the crisis, as Heilbron put it.
Holger Paulmann (SKY): "We... have four [grounded]".
Frederico Pedreira (Avianca): "We have nine out of 150 narrowbodies, but 6 out of 15 widebodies".
Estuardo Ortiz (JetSMART): "We have eight aircraft out of 50".
Roberto Alvo (LATAM): "I seem to be in a competition... I have 24".
Pedro Heilbron, after joking he "decided not to speak ill of the camel" just as he's trying to sell it, offered a silver lining: the crisis, combined with airframe delivery delays, has inadvertently "maintained greater discipline in capacity" and prevented a post-pandemic glut of planes that would have crashed fares.
SAF Mandates: ‘On What Grounds?’
On the final topic of Sustainable Aviation Fuel (SAF), the CEOs expressed deep frustration with mandates disconnected from regional reality.
"Two years ago we talked... about a project in Paraguay," Frias recalled. "And... 2025, not a drop, not one project approved... What now?".
Alvo confirmed the gap. "There is no project... that has any level of advancement to produce SAF in the region... and even if one started today, it's probably 3 or 4 years from the first drop," he said. "At the same time, we have the Brazilian government... imposing... an obligation that starts in 2027 that... is not realistic".
Estuardo Ortiz delivered the panel's most passionate critique, comparing the airlines' position to a famous sitcom character. "'I feel like we're... the 'chavo del ocho'... who gets blamed for everything,' he said. 'We took on the burden of being responsible for solving SAF production. On what grounds?'"
He argued that the responsibility should lie elsewhere. "The manufacturers... of engines... of energy, the governments... should be at these forums... In what moment did we lock ourselves into this?"
Heilbron agreed, concluding, "From the beginning, the weight was put on the airlines... But the airlines... have the least power or influence... You have the oil companies... the governments that must give incentives... As long as it's just us discussing this, we'll continue as we are".
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