Though Venezuela's airline industry has descended into shambles, the broader Latin American air transport sector is on track to expand at a leading pace in the coming decade, says industry group IATA's regional vice-president for the Americas Peter Cerda.
"Venezuela has slowly disconnected itself from the rest of the world," Cerda says at the ALTA Airline Leaders Forum in Brasilia. "Its aviation industry is in havoc."
Venezuela's air travel sector shriveled in recent years as carriers cancelled flights amid civil unrest, political instability and economic decline.
"Unfortunately, traffic has plummeted," Cerda says, noting that only four of IATA's member airlines still fly to Venezuela and that no US airlines serve the country.
Domestic air service with Venezuela is nearly "nonexistent", operating costs are high and the country's "government has made no attempt to seek collaboration" with industry, Cerda adds.
Airlines worldwide have also lost billions of dollars in funds due to an inability to convert holdings in Venezuela's currency into other currencies.
"The monies that are owed to the industry are, for all practical terms, lost at this time," Cerda says.
Venezuela aside, Latin America's air travel industry, measured in number of passengers carried, is primed to expand at an average rate of 4.5% annually for 20 years, during which the number of passengers carried will more than double, Cerda says.
"We will be one of the fastest-growing regions around the world," he adds.
Still, Cerda says the Latin American air transport industry continues to struggle with high taxes, security concerns, onerous regulations and some populist governments' negative view of free-market economics.
"We cannot continue to pay some of the prices or continue to be seen as the cash cow or the golden goose industry, as we have been perceived," says Cerda. Latin American governments must treat the airline sector "kinder than they have… if this industry is going to continue to grow".
Latin America's airlines still struggle with razor-thin margins, earning a projected 50 cents in profit per passenger carried in 2019, an improvement from 2018's negative figure but still lagging other regions. Carriers in the USA, for instance, will earn an estimated $14.80 per passenger this year, IATA projects.
Cerda sees optimism in Brazil's aviation market thanks to economic improvement, regulatory changes and tax cuts, which have spurred new domestic and international flights.
"Things are beginning to get into order," he says of Brazil. "We see a very proactive regulator who has done its best to modernise aviation regulations."
