Brazil Must Address Infrastructure Shortages as Latin America Sets Aviation Priorities

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In the Latin American and Caribbean Air Transport Association (ALTA) Leadership Forum in Panama City this week, the International Air Transport Association (IATA) called on Latin American governments to address regional challenges of safety, rising taxes and inadequate infrastructure in Brazil. The Association also called for the region to take advantage of the strength gained through a decade of change to take leadership on global issues including liberalization and climate change.
 
"Latin America has emerged as a shining star in the industry after a decade of crisis and change. Ten years ago the region was a mess. Today it is the only region that has delivered a profit in 2009 ($500 million) and in 2010 ($1 billion). We expect profitability to extend to a third consecutive year with a $600 million return in 2011. The turnaround is the result of hard work and a willingness to change. But aviation remains a tough and dynamic business. Even more change is needed. But the position of the Latin American industry going forward is much different. The successes over the last decade give the region a platform to be a force for global change," said Giovanni Bisignani, IATA's Director General and CEO.

Bisignani outlined three strategic regional priorities:

• Safety:  A decade ago, the region's hull-loss rate for western-built jet aircraft was seven times the global average. By 2009 that had improved to a perfect record of zero. Four tragic accidents in the first 10 months of 2010 have seen the accident rate increase to 3.2 times higher (2.36 Western-built jet hull losses per million flights) than the 0.73 global average. "Safety is a constant challenge for governments and industry. The priorities for the region are to increase implementation of Performance-Based Navigation procedures, find solutions to runway excursions and improve congested airspace. A good example of the cooperation at work is the Latin American Civil Aviation Commission (LACAC) initiative to make the IATA Operational Safety Audit a condition for all airlines operating to, from or within Latin America. Brazil, Chile, Costa Rica, Panama and Mexico are already using the audit to supplement oversight capabilities. I look forward to quick progress among the remaining governments in the region," said Bisignani.

• Taxes:  Aviation is crucial to Latin America's economy but the tax burden continues to grow.  Caribbean countries this year have proposed $287 million in tourism taxes, as well as Nicaragua and Panama.  "Governments must understand that airlines are not a cash cow. As an industry, we must speak with a much stronger voice to refocus governments from taxing us to death to driving economic growth with a healthy air transport sector," said Bisignani.

• Brazil:  Brazil is Latin America's fastest growing aviation market but its infrastructure capability is not keeping pace with the growth in demand.  Of the top 20 airports in Brazil thirteen don't have terminals that can meet today's demand. This includes Sao Paolo Guarulhos, the region's largest hub which will play a gateway role in 2014 for the FIFA World Cup and in 2016 for the Summer Olympics. "I don't see much progress and the clock is ticking. To avert a national embarrassment we must get all the stakeholders to the table and finalize a plan," said Bisignani.  IATA is adding resources in Brazil and today named Carlos Ebner as Country Director to be based in Sao Paolo with effect from 1 December 2010.

With the United Nations Framework Convention on Climate Change (UNFCCC) meeting in Mexico later this month, Bisignani urged the region's airlines to use the opportunity to remind governments of the industry's proactive approach. "The industry is committed to improving fuel efficiency by an average of 1.5% per year to 2020, capping emissions from 2020 with carbon-neutral growth and cutting emissions in half by 2050 compared to 2005. Since 2004, airlines have saved 76 million tons of CO2. At the last International Civil Aviation Organization (ICAO) Assembly governments committed to, among other things, cap emissions from 2020. We will go to Cancun with our homework done. No other industrial sector is so advanced in its commitments or so aligned with governments," said Bisignani who also appreciated the confirmation by UNFCCC Executive Secretary Christiana Figueres that aviation's international emissions should be managed by ICAO (line with the Kyoto Protocol) and in cooperation with the UNFCCC.
 
Bisignani also encouraged Latin America to leverage its recent success to play a leading role in global efforts on liberalization. "The combined market capitalization of LAN and TAM is about $14 billion. That is more than British Airways/Iberia ($5.5 billion), the Lufthansa Group ($10.4 billion), Air France/KLM ($5.7 billion), Delta ($11.2 billion) or Continental/United Airlines ($8.8 billion). Across Latin America we have seen the success of multi-brand, multi-national and multi-hub operations. The benefits that Latin America's consolidation is bringing to consumers with stronger carriers should make it clear to all governments that aviation's commercial freedoms should be enhanced, not restricted," said Bisignani.
 
"Latin American aviation is a success story of delivering profitability and developing innovative business models. This region has an enormous amount to contribute to the global industry. In the coming months we will be preparing for the Vision 2050 summit.  Together with Harvard University's Professor Michael Porter, 25-30 of the greatest minds in aviation and the inspirational support of Singapore's Minister Mentor Lee Kuan Yew, we will look ahead 40 years. Our goal is to identify what is needed to drive an industry that will be safer, greener and much more profitable. The Latin American experience will make an important contribution to that discussion," said Bisignani.
 
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