IATA executive warns of travel tax increase

27-08-24

During CAPA's Latin America and Caribbean Airline Leaders Summit, Peter Cerda, IATA's regional vice president, emphasized the need for better dialogue between governments and airlines on international connectivity. Although governments have asked for more routes, Cerda stressed that opening new connections is not easy due to lack of personnel and aircraft.

Cerda noted that many governments increase taxes on tourism, which contradicts their efforts to increase connectivity. This tax increase discourages travelers, especially when consumers can search for better prices and destinations on the Internet.

The IATA vice president explained that the airline industry is easy to tax, especially in the Caribbean, where air travel is the only viable way to reach the islands. In some cases, taxes on tickets are significantly higher than the cost of the ticket itself.

Cerda stressed the need for a transparent and collaborative relationship with regional governments to manage these challenges, asserting that this is key to economic development and improved social conditions.

Lori Ranson, CAPA senior analyst, noted that the airline industry is on a positive post-pandemic trajectory, especially in the Caribbean, although some regions are recovering more slowly. However, high taxes remain a challenge for the sector.

Jose Freig, vice president of operations for American Airlines, mentioned that the company reported record revenues in the second quarter of this year and highlighted the strong recovery in the Caribbean. Despite this, Freig said that they do not plan to increase flights to Trinidad at this time.

Finally, Freig acknowledged the need to work collectively with governments and organizations such as IATA to manage high taxes and remain committed to the markets in which they operate, stressing the importance of responding to customer demand.

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