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Date: 19 July 2019

IATA Recommendations on boosting the value of aviation in Colombia

Translations:

Recomendaciones de IATA para aumentar el valor de la aviación en Colombia (pdf)

Bogotá - The International Air Transport Association's (IATA) Director General and CEO, Alexandre de Juniac, visited Colombia and with several high-level representatives of the newly-elected government, including the country's president, Iván Duque.

Coinciding with de Juniac's visit, IATA released its latest study on the value of air transport in Colombia, which shows that aviation currently contributes around US$7.5 billion to the country's annual GDP and supports more than 600,000 jobs. As the second largest aviation market in Latin America, Colombia has great potential for further development.

"We had a very fruitful and open dialogue with president Duque and several of his ministers.  We are confident that aviation in Colombia will be receiving the necessary support, so the sector can contribute to the economic growth of the country. We look forward to continuing on this constructive path", said de Juniac.

Some of the key issues discussed include the following IATA recommendations:

  • Investing in necessary and adequate infrastructure, especially at Bogota's El Dorado Airport. Despite recent investments, the airport continues to operate beyond its designated capacity. IATA welcomes the government's decision to focus on expanding and improving the current facility, rather than opting for a new airport. The planned comprehensive study on the Bogota airspace will undoubtedly offer additional solutions to safely increase the capacity. Expanding the airport's operating hours also needs to be considered, along with modernizing airport processes. Moreover, the existing concessionaire's contract must be reviewed urgently, in consultation with the industry. The concession's incentives need to be aligned with the country's growth objectives. A further issue related to Bogota airport is the planned introduction of pre-clearance for US flights. IATA would only support pre-clearance if all stakeholders are effectively consulted and a cost-benefit analysis shows measurable benefits for all. The operational efficiency and flexibility across the entire airport terminal must not be compromised and Bogota's competitiveness as a hub airport maintained.
  • Improving airspace utilization, by further lifting restrictions in the Palanquero military air space. Since 2017 civilian aircraft have been able to make use of "conditional routes" (CDR) to overfly the area. IATA proposes that CDRs are made available at all times and only be closed when military operations or trainings are taking place. This would allow airlines to include the route during their flight planning stages. Extending CDRs to flights departing Bogota would generate further time, fuel and emission savings.
  • Revising the various taxes imposed on aviation. The economic value of aviation is not in the taxes it contributes. It is in the economic activity that aviation generates. Making connectivity more accessible with lower taxes will spread prosperity. IATA's studies show that a reduction of the VAT from 19% to 10% will have a positive impact on tax revenue from increased traffic and additional economic activity. At present, between 33-47% of the total price of the ticket in Colombia can be attributed to taxes. The country has a complex tax structure with multiple agencies and the bureaucratic application and exceptions create a significant administrative burden on airlines, causing further confusion and inefficiencies. Simplifying this will promote growth.

The Colombian government also needs to once again permit local airlines to compensate their emissions on the international market. The current restrictions limiting this to domestic carbon off-set projects, results in airlines only being able to compensate less than 20% of their emissions.

"We also touched on the subject Sustainable Aviation Fuels (SAF). Colombia has been supporting the production of biofuels since 2005. We have therefore agreed to jointly explore opportunities related to the development of SAF", commented de Juniac.

Taxation on fuel is another concern. The import duty of 8% has an estimated annual impact to airlines of nearly US$10 million. Increased competition of supply and imports, improvements in the distribution infrastructure and stronger regulation regarding fuel facilities all have the potential to reduce the price gap with countries such as Panama and Peru.

Aviation is the business of freedom as it allows people to travel and connect with others, either in their own country, region or across the globe. It also enables trade and brings economic benefits for all. Following the constructive meetings with the representatives of the Colombian government, IATA is confident that its recommendations will be implemented allowing the country to harness the potential of the projected growth in the aviation sector.

 

For more information, please contact:

Corporate Communications
Latin America & Caribbean
Tel: +1-438 -258 3155
Email: ruedigerm@iata.org   

Notes for Editors:

  • IATA (International Air Transport Association) represents some 290 airlines comprising 82% of global air traffic.
  • You can follow us at twitter.com/iata for announcements, policy positions, and other useful industry information.

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