Key part of global air route needs overhaul says airline group

Cancun's beaches attract millions of tourists a year. Photo / Grant Bradley

A key part of a global aviation route that New Zealand could be the critical hub of is growing fast but needs an infrastructure overhaul, an airline industry group says.

Auckland Airport is seen increasingly as a potential hub for traffic from Asia and on to Latin America but many of that area's airports and air traffic control are below standard, the International Air Transport Association says.

In a presentation on the eve of the association's annual meeting, its regional vice president for the Americas Peter Cerda urged governments in Latin America to address ''critical infrastructure deficiencies" and applying regulations.

By not addressing the urgent infrastructure needs of the region, Latin America would leave $42 billion of unrealised economic benefits on the table by 2034.

"With passenger growth in Latin America expected to double by 2034, the air transport industry's contribution to regional GDP could jump from US$140 billion to $322 billion. The industry is on a path to achieving that growth sustainably," he said in Cancun, Mexico.

"Unfortunately governments in the region are hindering sustainable growth with chronic infrastructure deficiencies and debilitating regulation," Cerda said.

Air New Zealand flies to Argentina and is scoping other possible destinations in Latin America.

Cerda said archaic air traffic management in Buenos Aires and the surrounding area was undermining the competitiveness of the aviation industry in the region and causing delays for airlines and longer flight times for passengers.

The government had made positive changes to the regulatory framework in the country, approving new routes and operations of new carriers but Argentina's inefficient air traffic control system is in urgent need of modernisation for aviation to truly flourish in the country.

"It is a government responsibility to provide infrastructure. For airlines to play their vital role of linking communities and economies globally, governments need to play their part, ensuring sufficient capacity, quality alignment with airline needs and at affordable costs," Cerda said.

In Brazil - where just half the population of 200 million fly - unorthodox regulation has stymied the growth of the air industry.

''Some of the more onerous examples include a fuel policy that increases costs for airlines $660 million per year and rules that punish airlines for delays and cancellations even when they are not the fault of the air carrier."

Lower airfares, rising incomes and demographic growth are fuelling significant passenger demand in Latin America. However, many of the region's key airports are unable to absorb it.

The two most critical examples are:
Jorge Chavez International Airport in Lima, Peru, where insufficient capacity was stifling expansion and the establishment of a regional hub. The airport, with a terminal designed for 10 million passengers per year is currently handling 17 million passengers. Without an expanded terminal, airlines will not be able to add the capacity to meet the growing demand.

Mexico City, one of the region's main air hubs had also seen its growth constrained by antiquated infrastructure. A new airport, once completed, should alleviate these limitations, but that is several years away. In the meantime the current airport, which is operating at capacity, can only add new flights during off-peak, night-time hours.

In chaos hit Venezuela the government was holding on to US$3.8b in airline funds.
United Airlines has stopped flying there and Cerda said others would likely follow, leaving the country largely isolated.

"Unfortunately we're beginning to see it. Slowly, unfortunately Venezuela is cutting itself off from the outside world."

The travel ban proposed by US President Donald Trump would not have a direct impact on the region, however, Cerda was asked if it could have a chilling affect.

"We have to see the different policies that the US government puts in place - we're still waiting for that. All the airlines in Latin America are very innovative and will take measures very quickly and cut off the bleeding as quickly as possible."

Latin America had all the necessary elements to become an aviation success story with competitive and efficient airlines, a growing middle class, favourable demographics and a geography that required travel by air.

Cerda said: "However, with the exception of Panama and Chile, the region's governments are not treating air carriers as partners who drive valuable social and economic development."

* Grant Bradley travelled to Cancun courtesy of IATA and Air NZ