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The Ecuadorian Government announced that the ISD is eliminated for airlines operating in the country, this as an advance to the agreement of Open skies with USA.
Seeking to improve competitiveness and be more attractive to airlines, The Ministry of Tourism of Ecuador announced that the Foreign Currency Exit Tax is eliminated for foreign airlines operating in Ecuador.
Without further information yet on the legal issue for the implementation of this proposal that seeks to make the country more attractive for future airlines that are interested in coming to the country, as well as offering better conditions for current international and domestic operators, Ecuador takes an important step towards commercial aviation development.
This measure is known to come thanks to the requirement of USA to advance in the process of signing an agreement of Open skies with the country that we have the most flights from Ecuador, which will allow lifting the maximum number of frequencies assigned per country, airlines, destinations and more, to open a wide range of options that further enhances connectivity with this North American country.
ISD for airlines
delete the Exit Currency Tax to the airlines, In addition to making the country more competitive and attractive, will allow airlines to potentially adjust their operating expenses and move at a lower cost to users, since that additional expense of the 5% for payments abroad or for repatriating money to their parent companies, definitely, is transferred to the final passenger in the ticket cost.
This will also benefit the purchase of parts and spare parts that airlines make abroad., send crews for training to other countries, operating costs, fees paid at foreign destinations, etc.
Finally, the main benefit will be for the user, which will be able to see in time the arrival of even more airlines and increase in frequencies in Ecuador, which will generate more offer in the market with a potential reduction of the rates in the freedom of the market rules.
The Presidential Decree 182 of the 2 September 2021 effective as of the date of the specific publication:
- Set a zero percent fee (0%) of the Foreign Currency Outflow Tax on transfers, shipments or transfers of currency made by foreign airlines authorized to operate in the country that have the document proving that they have been designated by their aeronautical authority to operate an international service, be this passenger, cargo and mail combined, or exclusive cargo in Ecuador.
The SRI will have 15 days for the modification of the respective resolutions that allow the suspension of the collection of the ISD.
A good start to improve the country's competitiveness, there are still great challenges such as the unproductive EcoDelta, Q of fuel and others.
Will the cost of tickets go down??
This response and result will be subject to market conditions and increase (it is expected) of supply and demand. The benefit is direct for the airlines, but users will not see directly reflected a 5% less than the value of the ticket as long as new routes are not generated, more companies or increase in current frequencies.
Equally, in domestic there is no direct benefit, but it is to be expected in the medium term, an increase in the arrival of foreigners to the country due to a greater supply, which would also be transferred to the domestic flights with more users, therefore we could also see a parallel benefit, but not directly related to greater supply and demand for local airlines.
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