LAC region is first in world to reach 2019 passenger levels

Latin America and the Caribbean became the first region in the world in September 2022 to reach the same passenger numbers as in 2019, even exceeding it by 1.2%.

Specifically, 28.6 million passengers were carried in LAC in September. North America, as the second fastest recovering region, reached 96% vs. September 2019, Africa and the Middle East 93% and Southeast Asia 75% of its 2019 levels.

In terms of RPK (revenue passenger kilometer), the region also continues to lead the recovery, however, it did not reach 2019 levels in September, with 97.4%; this difference is because many passengers have preferred domestic or short-haul flights, rather than long-haul or transatlantic flights.

In the cumulative January to September, close to 241 million passengers were carried and, despite the fact that in September the number of passengers carried in 2019 was exceeded, in the cumulative for this year, the region is still 10.9% below its 2019 levels.

In the region, three countries continue to stand out in terms of international passengers. In September 2022, the Dominican Republic reached 124% compared to the same month in 2019, Mexico 114% and Colombia 113%. On the other hand, Brazil, Chile, Argentina and Peru have not reached their levels in 2019.

The country with the slowest recovery and the least competitive in the region in terms of taxes, fees and contributions is Argentina. According to an estimate carried out by ALTA, in terms of taxes, a ticket of USD 110 will have to pay USD 198 in taxes, fees and contributions, that is, almost 2 times the ticket fare, which imposes barriers for the possibility of travelling to and in Argentina.

Domestic traffic continues to rebound

Domestic traffic has been recovering rapidly. In September 2022, the region achieved a 3.2% growth versus 2019 levels, while extra-LAC international traffic grew by 2.6% over 2019 and intra-LAC traffic was 10.4% below 2019 levels.

This September 2022, Colombia had outstanding domestic growth reaching again 14% above its 2019 levels, while Mexico reached 12% above its pre-pandemic levels. However, by 2023 it is likely that Colombian domestic air transport may experience some loss on its dynamism, mainly because the VAT or sales tax tariff, which was temporarily reduced from 19% to 5% as a measure to drive tourism during the pandemic, will return to its pre-pandemic levels. This measure drove demand and evidence shows that passengers react to prices.

"In a context of high inflation and in a region of the world where 24% of the basket of basic goods is destined to food, the consequence is that the remaining income for consumption is reduced. However, the figures show that air transport is an essential service in Latin America and Caribbean, both for tourists arriving in the region and for the population. Aviation in Latin America and Caribbean is on the path of growth, therefore the development of State agendas that promote air transport is essential for our countries to be more competitive to attract investments, to generate more efficient operational environments, more chances for operators to offer more options to users. Where aviation is, there is development, and it is our mission to build bridges of collaboration between all public and private actors to ensure that aviation continues to offer the safest, most efficient and environmentally responsible means of transport," commented José Ricardo Botelho, ALTA's Executive Director & CEO.

The load factor in September reached 82.4% and is 2.2 points away from achieving 2019 levels. Domestic was 82%, intra-LAC was 80% and extra-LAC was 84.3%. As for the countries' openness index, by October 26, 2022, the load factor showed a positive change for Peru and Ecuador, where all measures related to the restriction of international passenger traffic were lifted.

Historically high fuel prices

Fuel continues to have historically high prices. On October 24, 2022 the price of Jet fuel reached 186% above January 2021, while Brent crude oil increased 82% compared to the same period. The rise in the fuel price has increased the weight of such input in the cost structure of airlines, representing 37% of operating costs in the second quarter of 2022 and, for some airlines, up to 50% of operating costs.

Some countries in the region have made progress in offering more competitive prices, one of these measures has been the regulatory change to enable the use of JetA versus JetA1, which is slightly more competitive. Colombia and Brazil have made progress in this action.

SAF remains a priority to advance the decarbonization of air transport and this topic will be discussed in detail during ALTA's new face-to-face conference: the ALTA Fuel and Environment Conference, which will hold its first edition on March 29-30, 2023 in San Jose, Costa Rica.

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