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Improving Colombian Aviation Competitiveness

Publication date: 17 March 2011
Author: IATA

Tagged with: ,

The International Air Transport Association (IATA) urged the government of Colombia to strengthen the competitiveness of its air transport sector with further liberalization and infrastructure improvements.

“Colombia is one of Latin America’s most vibrant economies with a fast-growing aviation sector. To take this growth forward requires a strategic vision. I congratulate President Juan Manuel Santos for articulating this in his plans for aviation to play a key role in driving growth in the Colombian economy. This vision must be supported by strong government policies to improve aviation’s competitiveness and to facilitate profitable growth with greater liberalization and infrastructure improvements,” said Giovanni Bisignani, IATA’s Director General and CEO.

Bisignani met with President Santos to discuss the future of aviation in Colombia and to celebrate 100 years of powered flight in the country.

President Santos has set a national agenda to strengthen the country’s economy with a more vibrant travel and tourism sector which today supports 4.9% of Colombian GDP and nearly one million jobs. The President set three strategic goals to be achieved over the next four years: (1) to double the number of airline seats on offer in the Colombian market (2) to increase visitor arrivals from 2.8 million to 4 million annually, and (3) to raise travel and tourism from Colombia’s third largest source of foreign exchange (behind oil and mining) to first place.

“Aviation will play a key role in achieving these goals. Clearly the President understands this industry’s ability to be a catalyst for economic growth. Many existing policies have created great opportunities for Colombian aviation. But some areas do require major changes,” said Bisignani. During the visit, Bisignani sealed a consultancy contract with the Colombian government on the development of airport infrastructure in Bogota.

Bisignani highlighted the following in his meeting with the President:

Liberalization: Liberal policies have supported rapid developments in Colombian aviation, including 24% traffic growth between 2009 and 2010. “The mergers that have taken place in Colombia had strengthened the competitiveness of the main carriers serving Colombia,” said Bisignani noting the 2009 merger of Avianca with TACA, followed by LAN’s acquisition of Aires, and COPA’s integration with Aero Republica. These companies are competing in a more open market. “The US-Colombia Open Skies Agreement was a major milestone. Colombian business and tourism is now more connected to the world than ever before. The next priority is to formalize and quickly move ahead with a policy for regional liberalization,” said Bisignani.

Airports: In 2006, the Operadora Aeroportuaria Internacional (OPAIN) was given a 20-year concession to run Bogota’s El Dorado International Airport, Colombia’s largest airport. “In four years passenger numbers jumped from 11.7 million to 19 million. After that, everything was a disaster. We saw proposals for increases in some specific non-regulated fees of up to 280%. The promised investment did not happen. All aspects of the terminal are saturated and service levels are falling,” said Bisignani. The Bogota Chamber of Commerce surveyed customer satisfaction at the airport in 2009 and 2010 to find that, on a five point scale, customer satisfaction with the airport dropped from 3.66 to 3.44 in a single year.

“Concessions can be an efficient way to quickly develop airport infrastructure. But they are only successful if there is a strong, independent and transparent regulatory framework to manage investments, service levels and charges. There is an urgent need to review Bogota’s concession, update the master plan and put in place an effective regulatory framework. Otherwise you will be turning away business with insufficient capacity, high costs and poor service,” said Bisignani.

Air Traffic Management: “Colombia’s air traffic management needs a major overhaul to bring it into the modern era,” said Bisignani. In 2006, IATA, the Asociación Colombiana del Transporte Aéreo (ATAC), the Latin American and Caribbean Air Transport Association (ALTA)and Aerocivil signed an agreement to improve air traffic management. IATA presented a study that showed the potential for a 30% increase in airspace capacity with more efficient use of El Dorado International Airport’s parallel runways, revised approach and departure procedures, enhanced controller training, and implementation of modern procedures known as area navigation (RNAV) and performance based navigation (PBN). “The study has been around for five years. But the results have been limited. I urged the President to make airspace improvements a priority,” said Bisignani.

“Aviation is a great industry with 100 years of history in Colombia. It also has a great future in continuing to build Colombia’s economic success. If we can continue to create an environment to support aviation’s competitiveness with further liberalization and infrastructure improvements, I am absolutely confident that President Santos’s vision can be achieved,” said Bisignani.

View Bisignani’s full speech

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