Latin American low-cost carrier Viva Air is to consider a revived proposal to operate to Colon, after being forced to abandon Panama Pacifico airport as its entry point to Panama City.

Viva Air took the frustrating decision to withdraw services to Panama Pacifico – built on the ex-military Howard air force base some 10km from the Panamanian capital – after a sharp increase in passenger taxes.

The carrier says the taxes at Pacifico have more than doubled over the past three years, from $15 to $34.

Over the same period the air fares to the Central American state have declined, with the result that the share of tax in the average ticket price has risen to exceed 60%.

The impact of the higher tax has "broken" the low-cost carrier's economic justification for operating the Pacifico route, the airline says, adding that the tax has virtually reached the level of duties at Panama's main Tocumen airport.

It has been operating from the Colombian cities of Bogota and Medellin to Panama, and had been studying the potential for flights from Peru. But Viva claims that it has not observed any "material" improvement to facilities at Pacifico.

The full-year accounts for Aeropuerto Internacional de Tocumen, the government-owned subsidiary which runs the main airport, states that a 20-year concession agreement for Panama Pacifico was supposed to oblige the licensee to make investments over 2013-17 aimed at "solving the operating problems and restrictions" of the airport.

Viva Air has received a renewed invitation to consider switching to Colon's Enrique Jimenez airport which, at 55km north-west of Panama City, is much further from the capital than Pacifico.

"We will analyse this last-minute proposal," says Viva Air, adding that both sides will meet over the next month to explore the idea.

But the carrier points out that it had previously, and unsuccessfully, attempted to negotiate an agreement to use Jimenez airport. The airline had also examined Rio Hato, on the coast about 90km south-west of Panama City.

Viva says that a move to the main Tocumen airport is not realistic, owing to a scarcity of suitable slots for point-to-point traffic.

It remains interested in serving Panama, particularly given its upcoming fleet expansion involving 50 Airbus jets, but it states that such operations must be viable for the carrier.

Source: Cirium Dashboard