Summary:
- Peru has been one of the more dynamic aviation markets in Latin America, but capacity constraints at its largest international gateway, Lima's Jorge Chavez International airport could impede its economic development;
- World Travel & Tourism Council (WTTC) says Lima accounts for 59% of Travel & Tourism GDP in Peru, with 90% of visitors spending at least one night in the capital;
- WTTC estimates travel and tourism accounts for approximately 4.6% of Lima's GDP compared with 3.9% for Peru as a whole;
- IATA believes Peru could be reaping even greater benefits if the right infrastructure was in place at Lima and airport taxes and charges were competitive with other areas in the region.
A recent study by the World Travel & Tourism Council (WTTC) concluded that Lima accounts for 59% of Travel & Tourism GDP in Peru, with 90% of visitors spending at least one night in the capital. WTTC calculated Travel & Tourism accounts for approximately 4.6% of Lima's GDP compared with 3.9% for Peru as a whole.
But IATA has warned that Lima Jorge Chavez International airport is operating well above its capacity. Data from CAPA - Centre for Aviation and Fraport show 20.6 million passengers travelled through Lima in 2017, but the airport's capacity is just half that amount - 10 million.
"As the country's main international gateway, significant capacity expansion is needed for the capital to become a regional air hub and compete with airports in Bogotá, Panama City and Santiago," IATA has stated.
In mid-2017 the Peruvian government reached an agreement with Lima Airport Partners for an expansion project, but there's a high risk the airport will still face the challenge of demand outpacing capacity once the expansion project is complete.
IATA's assessment notes that aviation-induced tourism supports 280,000 jobs in Peru and contributes USD4.4 billion to the country's economy (2.1% of overall GDP). The association has concluded that Peru could be reaping even greater benefits if the right infrastructure was in place at Lima and airport taxes and charges were competitive with other areas in the region.
IATA argues that Peru has the potential to become an aviation success story if conditions improve. "Peru has all of the elements to become a regional aviation powerhouse: a favourable location for cross-border air connectivity, world-class cultural and culinary assets and a growing economy," says Peter Cerda, IATA's regional vice president for the Americas.
"Now is the time for Peru to be smart about aviation policy and ensure the right air transport infrastructure and cost structure are in place," he adds.
Peru has been one of the more dynamic aviation markets in Latin America during the past few years, particularly during the region's recent bout of economic weakness. During that time, the country charted solid economic growth and sustained stable air passenger numbers.
The country's domestic market has delivered some of the highest growth levels across Latin America during past few years and a recent CAPA analysis highlighted "the country has all the right elements to remain a fertile ground for air passenger growth". But it warned that buy-in from the government is key for Peru's aviation industry to reach its full potential.
"If Peru's government decides to draw a line in the sand towards fostering aviation growth, the country could become a leader in the region. The flow on economic benefits for Peru would be significant," it concluded.
READ MORE - view the full CAPA insight report: Peru aviation: Government now has a significant opportunity to seize growing demand for air travel