Taxation is a long-standing challenge for airlines operating in Latin America, and industry advocates are warning a proposed new tax on Bogota’s passengers could jeopardise Colombia’s competitiveness in the aviation sector.
Bogota’s mayor recent proposed levying taxes on passengers traveling through El Dorado International airport – USD2.88 for domestic travelers and USD5.00 for international passengers.
The World Travel & Tourism Council (WTTC) in a recent study calculated international spend represents 41% of Bogota’s tourism revenue, and concluded the city has a greater reliance on international visitors than several other cities in Latin America including Buenos Aires, Rio de Janeiro, Lima, Santiago, and Brasilia.
Latin American airline association ALTA highlighted El Dorado is the third largest airport in the region, handling more than 30 million passengers annually. The group warns increasing taxed would negatively affect the potential of Colombia’s airports to become regional hubs, compared to airports in nearby countries such as Panama.
CHART – Passenger traffic at Bogota El Dorado International Airport grew rapidly during the first half of the decade, but slowed in 2016 and declined in 2017. A return to growth is expected in 2018, based on traffic performance across the first quarterSource: CAPA – Centre for Aviation and OAG
ALTA noted success Colombia’s government has achieved in driving benefits for the country’s air passengers, including Aeronautica Civil de Colombia’s role in reducing airport taxes at Cartagena in 2015. “With this tax reduction, the city of Cartagena got a great jump in air traffic and tourism development,” said ALTA. “Resulting in more supply and demand more opportunities for more people to fly, and direct benefits to Colombian economy.” Cartagena’s passenger numbers increased in 2015 and 2016 by 15% and 12%, respectively.
VivaColombia has publicly opposed the proposal to levy taxes on passengers traveling through Bogota, warning the fees could reduce passengers levels by 902,000 per year. The airline reiterated IATA’s conclusion that “Colombia is the third country in Latin America to have the highest amount of taxes on air tickets after Venezuela and Argentina”.