THERE IT IS: "Latin America must lower its taxes"

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THERE IT IS predicts a 2026 of growth for Latin America, but with reduced margins as one of the lowest performing regions, just a little about African levels.

The airline sector Latin America is navigating a fascinating period of cautious reconstruction. Following recent crises that led several airlines to major restructurings (under the Chapter 11), the region has moved from survival to a strong focus on efficiency and profitability. Nevertheless, projections for 2026 They warn us of a sky with some financial turbulence.

The message of THERE IT IS it's clear, the governments, if they want to see increased demand and air traffic, They must reduce taxes that suffocate Latin American aviation and limit growth, compared to other regions, our airlines grow less than the global average.

Weigh in all, 2026 will be positive in Latin America

The operational data for 2026 paint an optimistic picture in terms of traffic and capacity:

• Demand (RPK): 6,6%
• Ability (ASK): 6,5%

This balance, where demand grows slightly more than capacity, is key. It means that airlines are achieving a lean capacity management, which translates into better occupancy factors and optimization of your resources.

Despite the positive numbers, there are many pending tasks, mainly from governments, who still see aviation as a way to “easy raise” money through taxes, overwhelming the sector and reducing the possibility of more people being able to fly.

It is therefore, what Willie Walsh Director of THERE IT IS during Global Media Day in Geneva, Switzerland was emphatic about the question I asked during the event: What key action can governments take to boost the growth of Latin American aviation and make it equal to the rest of the regions?? Responding:

The main recommendation is clear: get rid of all specific taxes.

These levies are harmful and offer no offsetting benefits from an economic perspective.. It's more, are “net negative” in all cases.

Governments believe the measures are economically positive because they are increasing revenue collection. Nevertheless, The reality is that they are more harmful due to the negative impact they generate on your general economy.. I think there is a need for a better understanding of the nature of these taxes..

I am pleased to see that in some countries – we have discussed cases such as Sweden and Germany – they are beginning to recognize that perhaps the net effect of these taxes is economically negative.. As a result, have begun to eliminate or reduce them.

I want to clarify that we are not against taxes, but we advocate a sensible and constructive use of them. You shouldn't try to convince people that all this money is being raised and that, indeed, It's like "free money". It is not.

There is a cost associated with the imposition of these levies and, in many cases, the economic cost is greater than the tax revenue collected. I consider that that is, to a large degree, the current situation in Latin America.

Profitable business, but not so much

Indicators regarding the profit of the business, for next year and closing the current one are:

Traffic growth remains strong, driven by economic stability and improved intraregional connectivity. Demand between the Americas has weakened, although this has been offset by the increase in regional flows and good transatlantic results, which highlights the ability of the region's airlines to adapt to changes in travel patterns.

Operating profitability is expected to rebound again in 2026, thanks to the gradual strengthening of the region's fundamentals. Nevertheless, The region's airlines generate a significant portion of their revenue in local currencies, while a large proportion of its key costs (combustible, aircraft leasing, maintenance, etc.) are paid in American dollars.

Now that several of the region's major airlines have realized the benefits of restructuring the Chapter 11, The region's scenario has shifted from crisis-driven survival to cautious, efficiency-focused reconstruction.

The airline sector Latin America is exhibiting notable operational resilience and a strong strategic focus on internal efficiency. Nevertheless, its vulnerability to macroeconomic forces, especially the volatility of the dollar against local currencies, remains the main threat to its future profitability.

The challenge for 2026 It will be to see if the efficiency of the region's airlines and their rapid adaptation to market demands in the face of irregular situations that are very normal in the region.

We are ready for a new information year in our exciting Latin American region.

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