No to air fare regulation in Ecuador

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In this special installment you learn why air fare regulation should not be applied in the airline market in Ecuador and what can be done to lower ticket prices.

It will not be the first time that this topic will be discussed on the blog., but unfortunately, once again it has sounded and we could say that with more force, the proposal of some authorities to promote air fare regulation for the Ecuadorian domestic market.

In this space we have talked about why are tickets expensive, How can these costs be lowered? and about the Taxes and fees, but it is important to remind the authorities again of some important concepts that must be taken and actions that must be taken into account even before, to think about tariff regulation, measure totally incoherent with a globalized world and a free market.

No to air fare regulation

The aviation, Like any industry, it must be self-regulated and self-controlled in matters of maximum and minimum values., This means that promoting state or aeronautical laws that limit free competition with policies that regulate what an airline can charge, It will cause the current airlines to be harmed in their investments and even cause them to leave the country and it would stop the future arrival of foreign investment from the large aeronautical groups in the region or the world..

before this, There are many more measures that can be carried out and that should be taken very seriously by the different authorities that have mentioned regulation or tariff control., in order to achieve the desired reduction in air ticket prices within Ecuador. We detail some:

• Ecuadorian aviation policy: The country at the Government level should generate state policies that encourage the air transport is accessible to all and a right for Ecuadorians, but not an exclusive means of transport, but inclusive.
• Update to the Civil Aviation Law and Aeronautical Code: so that our aviation grows, These must be updated with the most current parameters of such a dynamic airline industry that evolves month by month.. We must also be competitive at the level of laws.
• The costs are not only the fault of airlines and airports: Airlines charge a fee and airports charge another, but the final values ​​that users pay do not depend only on these two actors, there are also important burdens state taxes like VAT, ISD from EcoDelta, Tourist power on international flights. At this point the authorities that mention regulating rates, They should also follow the examples of other countries like Colombia, where the VAT reduction for air transport.
• Airport taxes: I am sure that if there is the will of all the actors and clear airline policies and incentives, the country's concessionaire airports (Quito, Guayaquil and Baltra) They would not hesitate to support the growth of passengers in the country by contributing with potential reductions in their costs and airport taxes that users pay., but everything must go hand in hand with the participation of all actors.
• Other taxes: Aviation does not only have taxes that users pay, Airlines, for example, have high surcharges for importing parts and spare parts. (plus the long time that imports take into the country), payment of the Foreign Exchange Outflow Tax or ISD that increases operating costs.
• Purser Q: It is a differential value of the fuel, which was created when the price of a barrel of oil exceeded estimates in the 2008 and also, to compensate in some way for the elimination of JET A1 fuel subsidy. This charge has not since been modified or adjusted., may also be a factor that supports cost reduction.
• Tramitology: reducing paperwork and facilitating processes for business creation or airline certification will help achieve the entire final objective..
• Drive more competition: It will be fundamental and the most important for costs to go down, that there is more competition, more airlines, but for this all the points above must be given, since our market must become attractive not only for passengers who fly, but also in policies, tax and other issues.

As usual, at orders to help in the aerocommercial development of Ecuador and I hope that this new guide reaches the hands of the country's authorities and can serve as a reference to generate the necessary changes in the country in favor of aeronautical growth..

Finally, let us remember that the Buying in advance is the best recommendation to buy cheap tickets and always be attentive to the airfare promotions.

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