Airport action

Leaders at the recent Latin American Airline Forum in Miami showed solidarity with IATA and several Star Alliance carriers as they denounced excessive airport fees

The airline assault on airport charges, instigated by IATA and recently taken up by Star Alliance members Air Canada, United Airlines and others, is finding some fertile new ground – Latin American airline executives are raising the banner too. At the recent Latin American Airline Leaders’ forum organised in Florida by Latin American Airline Association AITAL, executives singled out specific airports to an audience that shared their outrage.

TACA chairman Roberto Kriete denounced “excessive fees” and “long-delayed infrastructure work” at the San Jose airport in Costa Rica, where the multinational carrier has developed a mini-hub. He says the airport operator charges high fees because the Costa Rican government in turn charges the operators a huge price for the concession to run the facility, and adds that the fees do not all go into airport construction and improvement. Kriete argued that “privatisation of airport infrastructure has made airports an attractive investment class with extraordinary returns”, but that there is no justification for equity returns of 15%, 25% or even more because they are based on “monopolistic behaviour by airport operators”.

Unreasonable charges

Kriete’s colleague, TACA Peru’s chief executive Daniel Ratti, quipped that Peru is the land of opportunity, or would be “if the charges at the Lima airport were reasonable”. Ratti’s argument is with the airport operator at Lima and the Peruvian government. After taxes from the government and fees from the operator and others are added, fuel is costing as much as 10 times more than in other counties in the region.

In one example, Ratti said, fuel at Lima costs 40¢ a gallon more than at Mexico City and 30¢ more than at Guayaquil, Ecuador. Taxes and other fees and charges on fares out of Peru also added a surcharge, Ratti said, making a $420 roundtrip between Lima and Miami show a final cost of $759 when VAT, security fees, tourism tax and other extras were added on. Ratti said that the fees were eroding the natural competitive advantage of the airport’s geographical location. Lima, he argued, is ideal as a connecting hub for all but the southernmost cone of South America, with convenient timings available for a variety of cities.

Eduardo Flores, regional secretary of the Airports Council International-Latin America and the Caribbean, defended airports, arguing that they can deliver value for airlines. And Kriete certainly saw room for reconciliation and co-operative efforts, calling for joint efforts to increase traffic levels. Kriete argued for lower airport fees by offering the example of traffic stimulation through lower fares. TACA’s experience with its easyCAM fare simplification proves that airline travel is elastic, and the more it costs to fly the less people will fly – and vice versa.

AITAL president Juan Emilio Posada said that members had discussed the issue and even though the executives of many carriers shared the sentiments, the organisation had not discussed the possibility of concerted action along the lines of the Star Alliance boycott proposal, or the IATA call for concerted action. The organisation is, however, firmly united in its campaign to raise operating standards throughout the region – a stance that addresses a lingering perception in some parts of the North American market.

AITAL wants to raise safety standards in the region by requiring all members to commit to a voluntary IATA Operational Safety Audit (IOSA) by the end of 2006 and finish the audit by the end of 2007. Posada believes the IOSA process offers an objective analysis of “an airline’s capability to deliver operational safety on an ongoing basis” and many carriers refer to the IOSA registry when looking for codeshare partners.

IATA director general Giovanni Bisignani issued a statement praising the AITAL decision, noting that IATA has 140 airlines in the audit process, representing 70% of global traffic.

Unified position

Increasing safety through a united effort would also help AITAL – which now has 29 members compared with 19 a year ago – present a stronger and more unified position when it argues against excessive taxation and other government policies, according to Alex de Gunten, the association’s chief executive. Posada will be succeeded in the presidency of AITAL this year by Pedro Heilbron, chief executive of Panamanian carrier COPA. ■

Source: Airline Business