We carry out an analysis of the New Organic Law of Civil Aviation of Ecuador focused on key changes, regulation, cabotage and its possible impact on local employment.
Ecuador has a new Organic Law of Civil Aviation, approved in second debate in the National Assembly last 23 of September.
A positive and necessary step, does 20 years that a law so important for the general development of the country in connectivity was not updated, employment and economy. I repeat, necessary, but it does leave several questions to be resolved and some concerns among different actors in the great gear that moves the key airline industry national.
The idea of this publication is to put into discussion some issues that I consider require analysis and expansion by the competent authorities that promoted this law., in order to advance with sustainable aviation, efficient and accessible to all.
The new Civil Aviation Law of Ecuador
A few days ago I interviewed Juan Pablo Franco Director General of Civil Aviation on this bill, that today is already a reality, and I was able to ask some questions that you yourselves had told me on several occasions., but now the law has been approved, They are worth remembering and even, deepened.
I share the interview with you in case you want to hear it in detail.:
We start with the analysis based on the information currently available.
What's new about the Organic Law of Civil Aviation
Given all your concerns and comments that you shared with me on networks and even by email, I have prepared this post, and we are going to start with the differences that the new law has with what we previously had in local regulation. It is worth saying that this is only a summary and there are many more topics that we could review one by one:
- Unification of the regulatory framework and institutional simplification: The law merges the Aeronautical Code and the previous Civil Aviation Law into a single legal text. The National Civil Aviation Council disappears (CNAC) and the granting of all operating permits is centralized in the General Directorate of Civil Aviation (DGAC).
- Centralization of powers and procedures: The concession figure that coexisted with the operating permit is eliminated. The DGAC assumes the approval of commercial agreements between airlines and will set the durations of permits in its secondary regulations. The transport governing body assumes aeronautical policy and the setting of airport charges based on cost studies.
- Opening of cabotage for foreign companies: It is explicitly established that foreign legal entities domiciled in Ecuador can provide domestic or cabotage commercial air services.. To operate, they must be domiciled in the country., obtain permission from the DGAC and have the proper technical authorization.
- Hiring technical personnel: The strict requirement to have purely Ecuadorian personnel in local companies is eliminated and replaced by a general duty to "prioritize" the hiring of national talent.
- Sanctioning and investigation regime: Fines abandon fixed values in dollars and are structured in ranges measured in Unified Basic Salaries (SBU). The sanctioning procedure will be aligned with the Organic Administrative Code. For his part, The Accident Investigation Board becomes attached to the governing body, and the deadlines to declare an aircraft missing are reduced by 90 a 45 calendar days.
- Passenger protection and unmanned mobility: The regulation on unmanned aircraft is incorporated for the first time (drones). Regarding passengers, grounds for exoneration of liability due to force majeure are regulated, the reordering/refund regime against interruptions and the conservation of the 50% discount for seniors and people with disabilities through digital channels (this already existed, but now within the Law).
- Airports and concessions: with the Law, concessions will change in Ecuador and the government is expected to take direct participation in the current concessions available in 3 airports in the country and the door opens to "package" large airports with other small ones that are currently managed by the DGAC to the private sector..
Concerns about the New Civil Aviation Law
Let's continue now with the worries, doubts and what is not clear in the Law, what in 6 months must present its regulations, in which many or all of the doubts that follow will possibly be clarified. In the meantime, I leave them in writing to resolve each one of them over time..
- The impact of cabotage on local job stability: Flexibility for foreign airlines to operate internal routes, combined with the legal change from “requirement” to simple “prioritization” of Ecuadorian technical personnel, It generates a direct risk on current local jobs and on future pilots in the country who are currently studying or thinking about following their dream of being a pilot.. Under the new wording, The door opens for international airlines to operate domestic traffic using command crew members, cabin and foreign maintenance personnel, relegating the national technical talent that has been trained and invested in the country.
- Frequencies to Galapagos: since always, The frequencies to Galapagos have been the most sought after by airlines and are the spearhead to attract a third airline to the country, What will happen to the frequencies that were from Equair? Will they be freely granted to a foreign airline without Ecuadorian personnel??
- The lack of guarantees for real competition: The law alone does not generate greater supply nor will it automatically lower prices. The entry of new competitors responds to macroeconomic factors, actual passenger demand and operating costs. In a current context of security challenges, economic contraction and high costs, Thinking that the simple opening of laws will attract a critical mass of operators is an illusion without a comprehensive plan.
- Uncertainty in secondary regulations: Leaving neuralgic parameters such as the minimum capital required or the duration of operating permits at the discretion of the General Regulations of the DGAC generates a temporary scenario of legal uncertainty for current and future investors..
- Absence of a country plan for tourism and connectivity: Allowing the flight of foreign-registered or capitalized aircraft does not solve the underlying problem if low-traffic routes or disconnected communities remain unprofitable.. A transversal strategy articulated with the Tourism and Public Works portfolio is needed to encourage comprehensive and sustainable aerial development.
These are my concerns so far., as i indicated, We are awaiting specific regulations, but in the meantime the doubts are on the table for debate and knowledge of all of you..
What other issue concerns you about the LOAC?? I read them in the comments.
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