Colombian aviation faces opportunities and risks

Significance

The government’s desire to develop tourism will nevertheless require further investment in the aviation sector, both to facilitate travel and improve competitiveness. The recent intervention of the Civil Aviation Authority (Aerocivil) in an attempted merger of low-cost airline Viva Air and Colombia’s national carrier Avianca, suggests the government has few reservations about using its oversight and regulatory authority to influence sectoral developments.

Impacts

• More than 800,000 tonnes of cargo moves through Colombia’s airports annually, a figure that is likely to grow in the medium term.
• Tax increases on airfares will probably reduce airlines’ profit margins in 2023.
• Colombia’s poor road and rail infrastructure will ensure that domestic demand for air travel remains strong.
• Low-cost airline Ultra Air has denied claims that it too will cease operations, but the rumours alone will drive industry uncertainty.