A few weeks ago I had the opportunity to talk with José Ricardo Botelho, CEO and Executive Director of ALTA, the Latin American and Caribbean Air Transport Association. In a very pleasant chat, we were able to learn about the upcoming activities of the entity, in the run-up to two of the most major events of the year: the Joint Fuels Committee and the ALTA Airline Leaders Forum, in Buenos Aires.
Aviacionline: The Joint Fuels Committee is coming up in Rio de Janeiro, amid the great debate on sustainability that the industry is going through: what are the challenges and opportunities for the region in general and for ALTA in particular?
Botelho: It is a wonderful opportunity to talk about sustainable fuels because there will be ALTA members who produce FFS and governments who want to talk about public policies and regulatory situations on FFS. It’s important for the region to talk about this because Latin America has the capacity to supply almost all the feedstock needed for the global demand for PBS, but with a few exceptions, it has not yet advanced on the growth of production capacity.
— And what is needed to achieve that?
— We need to talk to governments about public policies: transparency, an adequate framework for investments, legal certainty. We can think strategically and put together a long-term framework for production. We need to achieve 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 the SAF, with an environmental policy, in short-, medium- and long-term programs: and we signed a joint resolution with CLAC (Latin American Civil Aviation Commission) on transparency, costs, and so on. In other words, the states are also moving.
— Beyond the shared visions, there are specific and particular decisions of the states that are not always aligned with this long-term vision. How do you reconcile the strategy and the tactic?
— That is where we come in. At ALTA we always propose an agenda in which we always contribute with technical data. As an industry, we listen to the governments, since they are sovereign, and we 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 set up protocols and in fact we held the only two face-to-face events, with zero contagions.
The same happens with the controversy about hand luggage in Brazil: we provide technical data, and the government decides. Our approach does not seek 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, economic regulatory control of activity that does not contribute.
— Each country changes its government and with it, the ideology can be closer or further away from state economic intervention in aviation. How does ALTA coexist with the different governments -more left-wing, more right-wing- and their positions 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 what city in 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 the technical point of view, the political world has no influence.
Aviation is synonymous with development and inclusion, and the technical data prove it. There is no ideology or subjectivity against this. In addition to public policy, what is needed are independent regulatory bodies with the freedom to make technical decisions. Why? Because we are talking about investments of billions of dollars 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, and let’s talk with 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 certain burdens, I can develop the ecosystem much more. Are these theorizations, are these subjectivities? No! These are models that we have already seen, we have already tested, and we can transfer them.
It is simple: people look at the price of the ticket as the first parameter to decide on a trip. Then comes the hotel, the dinners, the 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 that, direct and indirect jobs are created. Aviation is synonymous with development.
— From a recovery standpoint and in the post-pandemic scenario, how is the industry today relative to how you expected 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 the longest to reopen their operations need a little more time. Chile, without going any further. We always said that this is the safest transportation industry, with the only 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 the protocols and reached technical agreements that were safe. But fear and misinformation led countries and their technicians to take individual measures. When the restrictions started 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 closed and is already above 2019 levels. How much better would the recovery have been if the FAA didn’t downgrade it?
— Ah, I don’t have a crystal ball, but I know that Mexico has done a wonderful job in conjunction with all the actors: airlines, regulators, authorities are working together so that it can soon recover its category.
Mexico is a remarkably interesting market: it has 145 million people, and it is close to a market of 330 million people; the equivalent of the rest of the region, approximately 550 million. Wouldn’t it be good to look for a uniformity that would allow us to develop the region’s aviation system to the maximum? Just by achieving a more harmonious regulation between Colombia, Argentina and Brazil, development would be exponential.
The example is clear: the United States has 330 million inhabitants and 1 billion passengers per year. China has 1.5 billion and less than 500 million travelers. The difference? the government failures we mentioned before.
So: let’s focus on safety and leave economic regulation to the market itself. Because there is competition among airlines, for sure. Friedman said that every time 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 relate to… now, where should the focus be? on safety. If I fly a low-cost airline and they don’t serve me food, or a legacy airline and they serve me a steak, it should be my choice as long as the regulator guarantees 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 they are 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 is something we must take care of.
We cannot, as Latin Americans, miss the opportunity to take advantage of the global trend that was accentuated 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 connectivity.
