Source: ALTA

  • The CEOs of Wingo, JetSMART, Viva Air, Sky Airline, and Flybondi highlighted the region\\’s opportunity to become more competitive by reducing the costs of taxes and ticketing fees and creating regulations that incentivize industry growth

During the panel “Low-Cost Airlines (LLCs) in Latin America in the Post-Pandemic Era,” part of the agenda of the ALTA AGM & Airline Leaders Forum, Estuardo Ortiz, CEO of JetSMART, Felix Antelo, CEO Viva Air, Jose Ignacio Dougnac, CEO Sky Airline, Mauricio Sana, CEO Flybondi and Eduardo Lombana, CEO Wingo, participated and analyzed opportunities for the region.

The executives agreed on the excellent opportunity of the region to develop regulations to stimulate the growth of this segment to level the playing field and that it is necessary to review the fees, charges, and costs currently an obstacle in many markets.

Eduardo Lombarda, CEO of Wingo, highlights that they recorded 200% growth in available seats, doubled the fleet, and increased the flight portfolio. “However, the position will be very cautious. This is an industry where if you end up being oversized, you can destroy value very quickly. Despite having grown rapidly and that the demand has responded well, we believe that we must be cautious in our growth and, above all, very flexible”.

José Ignacio Dougnac, CEO of Sky Airline, described that today the Low-Cost airline market has grown. It has very competitive players with modern aircraft fleets and considers that they are now playing in a very competitive league. “Competition is tough. It is important to adapt to changes and conditions. For example, exchange rates are very volatile. We come to have more than 50% of the total cost in fuel, and the ability to adapt is key.” He stressed that flexibility is vital in the business to take care of the passenger.

Felix Antelo, CEO of Viva Air, emphasized that low-cost airlines have always emerged stronger from crises. “They have a faster recovery capacity, and in Colombia, which led the recovery of air traffic, the Low-Cost airlines led that recovery, but it must be recognized that the ballast that has been carried for years is still large.”

He insisted that the airline and aerocommercial sector needs the support of authorities in tax issues and better regulations. “There is work to be done between the public and private sectors.” He stressed that in Colombia, the VAT on airline tickets was eliminated. If this measure is not renewed, it will affect the cost to the passenger.

The CEO of Viva Air stated the need to work together with the Government and airlines to promote more air travel and move from 0.5 to 2 air trips per person per year on average.

Estuardo Ortiz, CEO of JetSMART, noted that it is optimistic that aviation in Latin America has recovered faster than in other regions. But he added that many challenges remain. Ortiz said that costs are challenged due to taxes and boarding fees imposed on tickets in many markets. He detailed that there are international flights in which 70% of the ticket price is made up of taxes. “If we want to think and dream of an aviation that connects all Latin Americans, as Europe has done, it is impossible if you are going to pay 150 dollars in taxes per ticket”. This airline has focused on closing the year with 60% more seats available than in 2019.

Mauricio Sana, CEO of Flybondi, agreed that it is time to have better regulation that stimulates Low-Cost airlines to grow in the region. “There is a need for clear long-term policies that encourage the market,” he said, indicating that they are pressured by taxes and fees that make fares more expensive. He highlighted that despite these obstacles, they fly 86% more passengers than in 2019.

He said there is an efficient way to operate without overburdening passengers with tax surcharges.

One of the proposals made by LLC market leaders is to achieve a special regulation for regional flights aimed at incentivizing this segment’s operations with lower boarding fees and taxes.

“What we want is to make it more affordable to travel. We have to think about an ultra-low-cost model for aviation. How we focus on efficiency and price,” insisted JetSMART’s CEO.

Likewise, Sky’s CEO said that it is not possible that 50% of the cost of the ticket is fees and taxes that discourage passenger demand. “We need to stimulate passenger traffic and have regional boarding fees that are cheaper than international ones,” he said.

“Many governments and politicians still think that travel is a luxury, and it is not. It is a necessity and is an essential service in many countries,” Antelo stressed.

Wingo’s CEO stressed that operating on an even playing field is essential to be competitive. “There is a huge opportunity to use airport infrastructure better today.”

For Flybondi’s CEO, low-cost airlines not only stimulate tourism but also move and mobilize small businesses, entrepreneurs, and people who need to travel efficiently.

The CEOs also stressed that amid the challenges of more competitive costs, they must focus on achieving environmentally sustainable aviation.