Think of Latin America, and several things spring to mind – rich natural resources, political instability and economic uncertainty being just a few. Other key features, though, are the urgent need for airport development in the region, as well as the ever more pressing environmental agenda, writes Megan Ramsay
In 2021, ACI World estimated that Latin America’s airports would require a total of US$94 billion of investment by 2040 in order to recover from the Covid-19 pandemic and to keep pace with rising demand in the long-term.
The Global Outlook of Airport Capital Expenditure – Meeting Sustainable Development Goals and Future Air Travel Demand, conducted by ACI World in partnership with Oxford Economics, said: “Latin America-Caribbean’s need represents an investment of about $94 billion of which an estimated $41 billion will be needed in new greenfield development.”
Across the aviation industry, investment fell as a result of the pandemic and has taken time to pick up, further hampered by subsequent events such as the Russia-Ukraine conflict and supply chain crisis as well as the global economic downturn.
Admittedly, Latin America’s airlines had been struggling since well before Covid struck. While legacy carriers like LATAM, Avianca and Aeromexico have successfully navigated their way out of bankruptcy and exceeded their pre-Covid passenger numbers despite fierce competition from low-cost carriers (LCCs) like JetSmart and Volaris, overall Latin American airlines are still battling to get out of debt.
Losses for 2024 are forecast to total $400 million. And the LCCs are not immune: Brazil’s GOL Linhas Aereas filed for Chapter 11 in January this year.
There are several local factors that continue to hinder development of the region’s aviation industry – not least the political instability and swings in policy that frequently occur after elections.
Liberalisation of air transport can be in – or out – with every change of government, for example.
Bureaucracy is another well-known issue for anyone doing business in Latin America. On top of that, airlines must contend with high taxes and charges in some countries.
According to data from the 2024 Competitiveness Index, conducted by the Latin American & Caribbean Air Transport Association (ALTA) and Amadeus, Argentina has “the highest tax burden in the region on airline ticket sales, totalling 72% of the final price”. Other Latin American countries, though, such as Brazil and Chile, have more favourable policies.
Another problem is what ALTA terms “excessive judicialisation”, whereby airlines are subject to high levels of litigation – especially in Brazil.
Pictured: Jorge Chávez International Airport
Add to these challenges a lack of liberalisation in the region, conflicting policies and regulations from one country to another (unlike Europe’s Open Skies model), high fuel costs owing to currency exchange rates… Clearly, Latin American airlines are having a tough time of it.
However, there are positive signs. For instance, LATAM’s network is larger now than it was before the pandemic – 148 destinations in 26 countries on four continents (America, Europe, Oceania and Africa), and continues to expand.
“This year we have inaugurated several new strategic routes to strengthen our connectivity in the region and improve what we can offer to passengers,” a LATAM spokesperson says.
One new route that stands out is the direct connection between Santiago de Chile and Orlando in the US. This new route is flourishing thanks to LATAM’s joint venture with Delta, with whom the carrier has been collaborating for two years.
“This partnership allows us to offer the largest and most diverse network in the region in terms of destinations and travel options,” LATAM says. “As a result, we have launched six new routes since the joint venture began.”
Other new LATAM routes include direct flights from Santiago de Chile to Brasilia, from Bogotá to Ibagué, and from Lime to Huaraz. It has also reopened its direct service between Santiago de Chile and Sydney as of 27 October this year.
“It is worth mentioning that we are planning to launch several other international routes during this second half of the year, such as Lima–Montego Bay (Jamaica), Lima–Curitiba, Lima–Rosario, Fortaleza–Santiago, Recife–Santiago, Santiago–Punta del Este and Santiago–Bariloche,” the spokesperson adds.
In September, the LATAM group increased its combined capacity by 14.3% compared to the same month of last year. This growth was driven principally by an increase of 19% in the group’s international offering. For cargo, the group’s capacity rose by 13.2% compared to September 2023.
LATAM aircraft on stand at Bogota in Colombia
In total, the group moved 60.5 million passengers between January and September, 12.4% more than in the same period of 2023.
Expansion
While the aviation industry faces numerous challenges, Latin America’s overland transport options can be slow, unreliable or even dangerous; air connectivity is thus essential to enable citizens to cover the region’s large distances more quickly, more safely and in greater comfort than if they were to travel by rail or road. Plus, tourism is a major revenue stream for many Latin American economies.
Airlines are clearly doing their best to meet rising demand – but the major airports are butting up against urban sprawl, reaching the limits of their ability to expand, and substantial investment is needed in secondary and tertiary airports to relieve this congestion. In some cases, greenfield development is the only way forward.
CAPA – Centre for Aviation says: “Brazil is the centre of attention in the LAC [Latin America and Caribbean] region, with 19 projects and two of the three largest, which are also the only three to exceed $1 billion in investment expenditure. Within the LAC region the total is 56 projects valued at $13 billion, an average of $232.1 million”.
Among the airports in the region that are making substantial investments is Viracopos Airport. Construction work began earlier this year and will include expansion of the existing passenger terminal, as well as construction of a new passenger terminal, a new cargo terminal, a second runway, a fire station and access roads. The $3.5 billion project is slated for completion by the end of 2031 according to some sources, although others give an end date of 2042.
Also in Brazil, Galeão Airport in Rio de Janeiro is investing in a long-running improvement project as the gateway benefits form flight restrictions at nearby Santos Dumont Airport; enhanced connectivity including boat links are among the work being undertaken at Galeão.
Another significant airport expansion in Brazil is that of São Paulo Congonhas Airport, which will take until 2028.
Then there is the construction of the new São Paulo International Airport near Caieiras, which should be finished sometime around 2032 or 2034 (approximately a decade later than originally planned).
Viracopos International Airport
CAPA outlines: “The airport is reportedly projected to feature a 340,000m2 passenger terminal with capacity for 48 million passengers per annum, as well as 70,000m2 cargo terminal and two 3,500m runways.”
Other new airport projects in Brazil include New Costa do Decobrimento International Airport, New Porto Alegre Airport and New Caxias do Sul Serra Gaúcha Airport. All four of the new Brazilian airports mentioned should be finished at various times up to 2030.
In Peru, meanwhile, Lima’s $2.4 billion New Jorge Chávez International Airport City project (a first for the region) should be done by the end of this year, with a new passenger terminal able to serve 40 million passengers from 2026, plus control tower and second runway among the scope of work. Intermodal links via the nearby port of Callao will add an extra dimension of connectivity.
Operated by Lima Airport Partners, Jorge Chavez International Airport provides access to more than 60 destinations. In 2023, it saw over 170,500 aircraft movements, with passenger volumes exceeding 21 million.
Peru is also busy with the construction of the new Chinchero Cusco Airport, slated for completion by the end of 2026.
Elsewhere, Santiago International Airport in Chile is benefitting from $700 million of investment, covering terminal expansion and a new terminal, plus renovations, a car park, an exposition centre and an overland transport hub, CAPA sums up.
New airports in Ecuador (Guayaquil), Colombia (Cartagena), Chile (Tongoy), Costa Rica (Orotina) and Nicaragua (San Francisco Libre) are also among the 15 projects to build new gateways in the region, with a total value of $11.4 billion, CAPA says.
Colombia is home to the region’s most connected international gateway, Bogotá, with 13,989 international links to 97 destinations in 2023. As traffic keeps growing, the country is reportedly investing $2.7 billion in five airports through public-private partnerships.
Cartagena’s Rafael Nunez Airport, Bogotá’s El Dorado International Airport, Cali Alfonso Bonilla Aragon International Airport and San Andres Gustavo Rojas Pinilla Airport will all be modernised and expanded. Plus, a new airport in the Bayunca region that will have capacity for 17 million passengers is to be built.
Furthermore, the Colombian Ministry of Transport confirms that more than $4.6 million is earmarked to improve Ciénaga de Oro and Montelíbano airports.
Sustainability
There are, of course, increasing demands for aviation to improve its environmental performance as it grows, and Latin America is by no means exempt. A substantial portion of the investment required up to 2040 (and beyond) must address this need.
Bogota Airport
Many airports in the region are implementing sustainable practices and carbon offset programmes, among them VINCI Airports’ gateways in Brazil, Chile, Costa Rica, Dominican Republic and Mexico.
In fact, Airports Council International Latin America and the Caribbean (ACI-LAC) awarded VINCI the Green Airport Recognition last year. VINCI is aiming to halve its direct carbon footprint by 2030 (compared to 2018), promote circular economy and preserve biodiversity.
The award recognised initiatives such as the construction of accessible walkways using recycled plastic lids at Guanacaste (Costa Rica), and an innovative battery bank project in Mexico that optimises the use of energy generated by photovoltaic cells.
“Energy efficiency initiatives have also been awarded by the ACI-LAC in Brazil at Salvador Bahia Airport (nominated by ANAC in 2022 the most sustainable airport of the country, that has already achieved an 87% reduction in carbon emissions (scopes 1 and 2) in 2022) in addition to sustainable waste collectors in Amazonia airports,” VINCI says.
Latin American airports are also demanding environmental best practice from handlers. For example, Menzies Aviation secured a new, eight-year ground handling licence at Lima’s Jorge Chávez International Airport in March, and says it was selected not only for “its expertise and experience in delivering safe and trusted ground handling services”, but also for “its commitment to sustainable and responsible business practices”.
The handler says its ‘Electric First’ approach to GSE “aligns with the airport’s efforts to drive sustainable practices within the aviation industry”. Lima also received the ACI-LAC Green Airport Recognition Award last year, and sourced electricity from 100% renewable sources in 2022.
But there are difficulties when it comes to improving sustainability in South America. A lack of consistent government support for SAF is just one obstacle to the aviation industry’s progress in this regard. And rising demand for air transport is making the need for change more urgent than ever.
The LATAM spokesperson says: “Decarbonisation is a challenge that demands immediate action. At the same time, it is a balancing act, because on one hand we have to reduce our carbon footprint, while on the other, we must continue to offer connectivity by virtue of the world’s social and economic development.”
LATAM at Brasília President Juscelino Kubitschek International Airport
As noted above, the spokesperson reiterates: “This last point is particularly important in a region like South America, with its vast distances, where aviation is essential not only for tourism but also for the movement of people who need to travel for education, medical attention, work, emergency response and many other reasons.”
In LATAM’s view, this challenge does not have a definitive solution and it cannot come from a single source. Therefore: “In partnership with Airbus, we have financed a study at MIT [Massachusetts Institute of Technology] to obtain high-quality, objective information,” the spokesperson says.
The study, entitled ‘Options for decarbonising aviation in Latin America in a sustainable way: an evaluation of carbon policies, carbon prices and fuel consumption in aviation up to 2025’, will provide an exhaustive analysis of scenarios for the rollout of SAF up to 2025, and will explore pathways relating to low-carbon hydrogen, direct air capture, and bioenergy with carbon capture and storage.
Plus, it will evaluate the use of incentives, carbon taxes and carbon compensation, among other quantifiable political instruments, to offset emissions from aviation. The analysis will provide actionable recommendations for Brazil, Chile, Colombia, Ecuador, Mexico and Peru, Airbus confirms.
“We hope this study will be a useful tool for decision making in the climate agenda of governments and states,” LATAM says.
The use of SAF, which does not require major overhauls of engines or fuel infrastructure and is therefore relatively cheap and quick to implement, is currently the most viable alternative to conventional jet fuel – hydrogen and other options being at a very early stage of development in comparison. And Latin America is likely to be a significant producer of SAF feedstocks, given that many countries there have land that could be turned over to SAF production.
There are concerns over the potential for deforestation to clear land for this purpose, but the use of existing agricultural land could avoid that. In addition, using degraded land to grow SAF feedstock plants (particularly those that require relatively little water in comparison to the sort of crops usually farmed for food production), would “improve the green credentials of SAF” according to a report by Project Finance International.
An aerial view of Marina da Gloria, Santos Dumont Airport and Rio de Janeiro downtown
PFI points out: “Brazil is an attractive destination for SAF production given its mature and developed aviation industry, its consistent track record of utilising blended fuels in its energy mix, a robust refining and energy industry well equipped with blending and distribution, and an experienced and sophisticated development bank.”
However, Latin America has so far been too slow to build SAF capabilities. IATA regional vice-president for the Americas Peter Cerda said at the association’s AGM last year that governments must take action to address this situation. Otherwise: “We will have aircraft that arrive from other regions utilising SAF but unfortunately they will fly out of Latin America utilising conventional fuel.
“What we need is for governments to first understand the importance of implementing the right regulatory regime that will incentivise the private sector to invest in SAF,” he added, noting that so-called “green taxation” is not a helpful approach.
Besides promoting SAF in Latin America, Airbus has also been exploring electrification, through the development of an advanced air mobility ecosystem for the region in partnership with Ecocopter.
