A few weeks ago I had the opportunity to speak with José Ricardo Botelho, CEO and Executive Director of ALTA, the Air Transport Association of Latin America and the Caribbean. In a very pleasant conversation, we were able to learn about the future activities of the entity, on the eve of two of the most important events of the year: the Joint Fuel Committee and the ALTA Airline Executives Forum, in Buenos Aires.
Aviacionline: The Joint Fuels Committee is coming to Rio de Janeiro, amid the great sustainability debate the industry is going through: what are the challenges and opportunities for the region in general and for ALTA in particular?
Botelho: It’s a great opportunity to talk about sustainable fuels because there will be ALTA members who produce FFS and governments that want to talk about public policy and regulatory situations in FFS. It is important for the region to talk about this because Latin America has the capacity to supply almost all the raw material needed for the global demand for PBS, but with a few exceptions, it has not yet advanced in increasing production capacity.
– And what is needed to achieve this?
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— We must talk to governments about public policies: transparency, an adequate framework for investments, legal certainty. We can think strategically and create a long-term framework for production. We need to reach a maturity to achieve processes that transcend governments: look at Brazil and its 30-year export contracts.
Last year at the ALTA Leaders’ Forum in Bogota, all members signed a unanimous declaration of commitment to SAF, with an environmental policy, in short, medium and long-term programs: and we signed a joint resolution with CLAC (Latin American Commission of Civil Aviation) for transparency, costs, and so on. In other words, states are also moving.
— Beyond the common visions, there are specific and special decisions of the states that are not always in line with this long-term vision. How do you reconcile strategy and tactics?
— This is where we come in. At ALTA we always propose an agenda to which we always contribute technical data. We as an industry listen to governments, as they are sovereign, and sit down and put the technical data on the table. It happened during the pandemic: in the face of a wave of closures, we provided data to establish protocols and actually held the only two events head-to-head, with zero contagion.
The same thing happens with the hand luggage controversy in Brazil: we provide technical data and the government decides. Our approach does not aim to create antagonisms between the public and private spheres. Let’s create a state agenda. Let’s create it together. We always seek to avoid what in economics is called government failure: state intervention that harms, regulatory economic control of activity that does not contribute.
— Each country changes its government and with it, the ideology may be closer or further away from state economic intervention in aviation. How does ALTA coexist with the different governments – more left, more right – and their attitudes in this regard?
— We always seek to connect with governments from the technical world of aviation, not from the political world. And the technical world works with data. In which city of the world where there is aviation there is no development? No city in the world. Aviation is an essential public service that is also an engine for development. If I understand aviation as an engine of infrastructure development, jobs, inclusion and economy from a technical point of view, the political world has no influence.
Aviation is synonymous with development and inclusion, and the technical data proves it. There is no ideology or subjectivity against this. In addition to public policies, what is needed are independent regulatory bodies with the freedom to make technical decisions. Why? Because we are talking about billion-dollar investments that require a long-term vision.
All discussions are valid, it is part of democracy and there may be actors who have different visions. Let’s sit down and talk data. I can sit down and with the data I have I can argue that we have plans to generate more employment. I can argue that, by reducing some burdens, I can develop the ecosystem much more. Are these theorizations, are these subjectivities? No! These are models we have already seen, tested and can transfer.
It’s simple: people look at the ticket price as the first parameter to decide on a trip. Then comes the hotel, dinners, excursions. If the ticket price is high, people don’t even come to the country. All the rest of the chain stops if the traveler never gets there. If I reduce unnecessary costs, the sector responds. And with this, direct and indirect jobs are created. Aviation is synonymous with development.
— From a recovery point of view and in the post-pandemic scenario, how is the industry today relative to what you expect it to be by mid-2022?
– It’s complicated. Regionally, it is the region that recovered the most. Some countries are already surpassing 2019 levels, but those that took longer to reopen their operations need a little longer. Chile, without further ado. We have always said that this is the safest transportation industry, with the one statistical exception of elevators.
Aviation has always had safety at its core. And to the safety culture, we add a biosafety culture. Globally, we discussed with ICAO protocols and reached technical agreements that were secure. But fear and misinformation prompted countries and their technicians to take individual measures. When restrictions began to be lifted, all that pent-up demand came back.
– One of the biggest markets – if not the biggest, in terms of passengers carried – is Mexico, which never shut down and is already above 2019 levels. How much better would the recovery be if the FAA didn’t would it lower it?
— Ah, I don’t have a crystal ball, but I know that Mexico has done a wonderful job in cooperation with all the actors: the airlines, the regulators, the authorities are working together so that it will soon regain its category.
Mexico is an extremely interesting market: it has 145 million inhabitants and is close to a market of 330 million inhabitants; the equivalent of the rest of the region, approximately 550 million. Would it not be good to seek a uniformity that would allow us to develop the aviation system of the region to the maximum? Only by achieving a more harmonious arrangement between Colombia, Argentina and Brazil, the development would be exponential.
The example is clear: the United States has 330 million inhabitants and 1 billion passengers a year. China has 1.5 billion and less than 500 million travelers. The change? the government failures we mentioned earlier.
So: let’s focus on safety and leave economic regulation to the market itself. Because there is competition between airlines, of course. Friedman said that whenever we seek economic regulation, there is a market failure that undermines freedom of choice.
We choose so many things… our partner, where we want to live, who we want to bond with… now, where should the focus be? on security. If I fly a low-cost airline and they don’t serve me food, or a legacy airline and they serve me a steak, that should be my choice as long as the regulator assures me that the focus is always on safety.
— Last question: Is the trend of consolidation of operators in the region increasing after the pandemic?
— I don’t know if I can call it a trend: I think it’s conjunctural situations. They are natural things and market decisions. In Europe there is a strong consolidation scenario, because the market is developed and there is little room for growth: there are 3.3 trips per inhabitant. In Latin America there are countries with 0.78, so the capacity to grow and gain market share is much more important. And that’s something we have to take care of.
We, as Latin Americans, cannot miss the opportunity to take advantage of the global trend that has been highlighted in the post-pandemic period: people want to get in touch with nature. And nature is in Latin America. As people want to come, let’s create the conditions for them to come. Let’s develop the link.
