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  • INTERVIEW: ALTA executive director Eduardo Iglesias

INTERVIEW: ALTA executive director Eduardo Iglesias

As he looks ahead to the key themes at the upcoming ALTA Leaders Forum in Mexico City, Eduardo Iglesias, the airline association's executive director, likes to present the Latin America and Caribbean region's traffic figures with and without Brazil.

Strip out economically troubled Brazil, and ALTA expects traffic growth of around 7.4% for 2016. But include the region's largest country, which is responsible for around 50% of its traffic, and the growth figure flirts with negative territory.

"If you take a snapshot of Mexico, going all the way down to Chile... that Pacific side of Latin America, including Bolivia, is showing very positive growth numbers in terms of traffic," Iglesias told FlightGlobal from the airline association's Miami headquarters ahead of the 13-15 November event.

"It has been a challenging year, with ups and downs, but I see the glass as half full instead of half empty. We continue to grow and see strong traffic numbers coming out of some countries in the region," says Iglesias, who has been in his role at ALTA for three years.

The host country of this year's Leaders Forum provides ALTA with plenty of good-news stories and, in some cases, a model that could be adopted elsewhere in the region.

"We are very happy to be in Mexico. There is the new open-skies agreement with the US and tremendous traffic growth," Iglesias says.

Mexico also features a strong legacy carrier, enjoys growing low-cost coverage, has shown flexibility on visa entry requirements and is investing in infrastructure. In achieving these things, Mexico's government appears to have grasped the value of aviation better than some others in the region.

KEY PILLARS

Selling the economic benefits of aviation is one of four key pillars that ALTA has been focusing on since the arrival of LATAM's Enrique Cueto as president of the association earlier this year. The others are: safety and security; efficiency and productivity; and the environment.

Explaining ALTA's role in highlighting the positive impact of aviation, Iglesias says many governments still "take for granted the fact that airlines are there".

Aviation, he argues, "is too often seen as a luxury [by governments] and is taxed accordingly".

He adds: "We're trying to make governments look further than the direct impact of aviation [so they understand that] we can be a key ally in expanding the economic reach and development of countries."

This apparent unwillingness to fully embrace aviation's benefits means that a lack of infrastructure investment is still a big topic in the region.

While some airport projects are in the works or have been completed recently – Mexico City and Bogota are both planning new airports, while Brazil has expanded Sao Paulo Guarulhos airport, for example – Iglesias acknowledges that governments continue to be far too reactive. This means they are always "playing catch-up" with traffic growth, rather than planning investment in a proactive manner.

In some cases, the effects of this shortsightedness are yet to manifest themselves. The rising low-cost carrier sector, for example, has been able to focus on underserved secondary airports for growth, avoiding the often congested major facilities.

"Low-cost carriers continue to come back with positive numbers... but so far they have been lucky in connecting secondary cities and bypassing the main hubs," says Iglesias.

This fortunate development does not hide the challenge that infrastructure still poses for the region's carriers. Aside from constraints on growth from insufficient airport facilities, air traffic control is another area where more needs to be done, Iglesias says.

"Even if we continue to expand the airports, there's a definite tipping point in terms of how much more air traffic the governments and the current air navigation structure would be able to accommodate," he says.

Iglesias cites the contradiction between the region's embrace of new aircraft technology and its continued reliance on antiquated ATC infrastructure, which means aircraft movement capacity is significantly limited. ALTA is working to convince governments to invest in new technology to improve this situation.

It is also continuing efforts to reduce the regulatory burden on the region's carriers.

"There's still a lot of work to do, but we're seeing positive signs, particularly on consumer regulations," Iglesias says.

He contrasts the region's circa 40 sets of regulations covering consumers with equivalent-sized economic areas such China, Europe and the USA, which each operate using a single set of regulations.

This means Latin America and Caribbean airlines have to deal with a uniquely complex administrative burden, which continues to frustrate growth efforts.

As part of initiatives to improve this situation, Iglesias says ALTA is working with governments to develop a common recognition process aimed at ending inefficiencies such as each country having to individually certificate MRO facilities.

FOREIGN INVESTMENT

Efficiencies such as this will undoubtedly be welcomed by the raft of overseas carriers who have begun to partner with, and invest in, the Latin America and Caribbean region's airlines.

The rise of overseas investment and partnerships has been a recent global phenomenon, and also one that was slow to take hold in ALTA territory. But Qatar Airways' investment in LATAM and Aeromexico's proposed joint venture with Delta Air Lines both show the trend has firmly arrived in the region.

"Today, if I were part of any board, I would be fully supporting these kinds of new trends of investment that give you knowledge transfer, best practices, etc," Iglesias says.

Avianca and Interjet are both potentially in the market for overseas tie-ups, he adds.

This outside investment and strong interest in partnerships reflects well on the region's growth prospects. An approaching challenge for the industry, however, is how it squares this expansion with the requirements of the recently signed ICAO resolution on climate change.

FlightGlobal's Flight Fleet Forecast predicts that the region's fleet will more than double over the next 20 years. For Iglesias, it is too early to outline how carriers will achieve this growth while also meeting strict emissions targets.

"[The agreement] may impact airlines that are growing – the growth opportunity in Latin America and the Caribbean continues to be very significant," says Iglesias. "We are, at this time, getting together to analyse the effect of the agreement."

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