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After a new decree by President Lenín Moreno, the air fuel subsidy returns in Ecuador.
It should be clarified at the outset, that really, never left. The jet fuel subsidy has gone through several stages in the country, but in recent times it still existed in airports managed by the DGAC – General Directorate of Civil Aviation, but with a narrow focus for only domestic flights. In this new decree, this subsidy is extended to international passenger and cargo flights, and also, for cargo flights.
In this point, it is better to explain the current situation of this subsidy in Ecuador chronologically:
18 October 2008
In full growth of domestic flights in Ecuador, the Government of Rafael Correa for the first time made a modification to the subsidy. At that time, this item cost the State more than $135 million annually. In this first decree, it was established that the airlines, to maintain the benefit of 40% of the JET A1 subsidy, they had to renew their fleets with aircraft of the year of manufacture 1990 or higher and that are equipped with ETAPA motors 4 (less noise, pollution and fuel consumption).
At this time the airlines of the time, Tame, AeroGal, VIP and Icaro suffered the impact. Tame was already in the process of renewing its fleet with the arrival of more Airbus A319 and A320 aircraft to replace the classic Boeing 727-100 and 200, and the Embraers 170 and 190 for the Fokker fleet 28. In the meantime, AeroGal began its first "flirts" with Avianca Colombia and would end up replacing its entire Boeing fleet 737-200 and his only -400 by Airbus A319 and A320 aircraft, not telling the short history of Boeing aircraft 757 y Boeing 767 (ended up absorbing VIP). For Icaro the story was tougher, since it was just beginning to incorporate Boeing aircraft 737-200 to expand its domestic operation and start international flights.
This decree gave airlines 18 months to complete your renewal, otherwise they would gradually lose the subsidy, to the established term, they would lose the 50% of the same. This decree had the purpose of modernizing the Ecuadorian fleet, which resulted as a very positive measure in favor of the user and operational safety.
26 November 2011
President Rafael Correa announces the total withdrawal of the airplane gasoline subsidy, which at that time cost the Government more than $90 million annually. in this then, This subsidy applied to all types of domestic or international flights that operated in Ecuador at any of the country's airport network. After this removal of 40% of the general subsidy, it was maintained only at airports that needed boosting or were managed by the DGAC to support domestic connectivity, such as Latacunga, Again, Santa Rosa, Salinas, Manta, Esmeraldas, The Coca, Sour Lake, Macas and others, Airports managed by private companies such as Guayaquil are left without this benefit., Quito and the one administered by the municipality in Cuenca.
At that time the national airlines paid approximately $1,35 per gallon.
15 October 2015
After 4 years from the validity of the first decree, President Rafael Correa signs the decree 799, in which some modifications are made to that of the year 2011. In this new decree, they highlighted 2 changes. The first was the removal of the 40% subsidy on those routes where an airport managed by the DGAC does not operate, this directly affected the route between Quito and Guayaquil, the one with the most traffic and profitability in Ecuador and second, implemented the subsidy for any national or international airline that opens a nueva direct route to or from Ecuador to any destination in the world with minimum 3 weekly flights for the period of 3 years. further, so that any airline could be benefited by the subsidy, their planes had to be of the year of manufacture 1990 onwards and have ETAPA engines 4.
With this last point the flights from Tame to Buenos Aires began, São Paulo, Fort Lauderdale as an example.
9 November 2017
In order to give new impetus to the airports managed by the DGAC, President Lenín Moreno signs a new decree, in which it is specified:
Natural or legal persons operating inside and outside of Ecuador, that have aircraft built from 1990, that have a valid air operator certificate and that provide national and international passenger air transport service, and or international cargo from the country, will pay the terminal sales price less the 40% as long as they operate on routes that include airports that are under the comprehensive administration of the General Directorate of Civil Aviation and airports delegated to the Municipal Authority., as long as they have not been granted, except for the route to the Galapagos Islands and the supply for technical stops.
Detailing the decree a bit, This is intended to directly support the Latacunga Cotopaxi Alternative Airport, to promote the arrival of new airlines and to materialize the start of operations of the Colombian cargo Aercaribe. further, seek to also boost the rest of the airports managed by the aeronautical authority and that have low demand such as Santa Rosa, Again, Macas, Esmeraldas, Sour Lake, Salinas and others.
Finally, the subsidy seeks to give a great boost to the Cuenca airport, with municipal administration, given the high costs of air tickets and hopes that this will also be reflected in an increase in frequencies, where LATAM Ecuador from december would increase 8 weekly flights.
This is a very positive measure for the Ecuadorian market, but above all for the user. The airports managed by the DAC will be able to attract more passengers when the rates are lowered, more frequencies and potential new airlines, of course it is, everything will depend on the creation of a great tourism plan as a country, where long-term strategies are generated so that this measure is maintained over time and is beneficial for all actors.
It also makes it possible to maintain the subsidy for new international routes that could start in the future.. it would be very important, at a given moment and in the medium term, that the Government extend this benefit to the airports of Quito and Guayaquil, main entry gates to the country, to attract new airlines, routes and more tourists, axis that the State wants and should promote.
To close, We also hope that a review will be made of the series of taxes that are levied on airfares in Ecuador., such as the Eco Delta ED or the Potencia Turística PT, which are taxes that make the departure and arrival of tourists even more expensive, among other taxes that could be revised, remembering that fuel should not represent more than 15% the value of a ticket.
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