Covid-19: ASUTIL and ACI LatAm seek financial relief for airport stakeholders

By Andrew Pentol |

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ACI-LAC and ASUTIL believe governments in Latin America must preserve the financial resilience of airports and their partners to help airports return to normal operations. 

Airports Council International – Latin America & Caribbean (ACI-LAC) and ASUTIL (Asociación Sudamericana de Tiendas Libres) are urging governments in the region to issue financial relief measures to assist aviation industry stakeholders during the Covid-19 crisis.

The implementation of travel restrictions across the region has led to the virtual disappearance of air traffic at many airports. The statement says this has negatively affected aviation ecosystem revenues and the financial sustainability of the industry.

As a result, ACI-LAC and ASUTIL have called for Latin American and Caribbean governments to offer economic, financial and fiscal relief measures to airports and aviation industry stakeholders.

In a joint statement, the associations emphasise that airports are reliant on revenue from airlines, passengers and commercial activities which play a key role in bridging the gap between airports costs and aeronautical revenues.

The statement also references the 2018 Economic Impact of Duty Free and Travel Retail in the Americas study, published by the Duty Free World Council. The study indicates airport commercial activities in Latin America and the Caribbean support around 41,800 jobs and $4.1bn in GDP.

PREPARING FOR THE RECOVERY

Aside the need for minimal operational capabilities, “airport operators and other airport service providers must be in a position to restore full operations when travel bans are withdrawn and air traffic restarts,” according to the statement.

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Airport commercial activities in Latin America and the Caribbean support around 41,800 jobs and $4.1bn in GDP, according to the 2018 Economic Impact of Duty Free and Travel Retail in the Americas study, published by the Duty Free World Council.

ACI-LAC and ASUTIL said:  “Together with their staff, they [airport operators and other airport service providers] are as important as airlines and their staff in the delivery of air connectivity. Accordingly, we urge the Governments of Latin America and the Caribbean to adopt balanced and non-discriminatory supportive measures targeted at safeguarding airports’ operational and business continuity.

“They must preserve the economic and financial resilience of airports and their business partners such as restaurants and duty free shops to allow airports and their business partners to return to normal operations as soon as possible and support the recovery of the wider economy.”

Taking all this into account, the associations are urging governments to waive airport concession fees. Where applicable, governments are being encouraged to relax payment conditions in terms of the fees companies must pay for the operation of airports. This is because concession fees represent a significant cost for airport operators.

Another proposal is to delay infrastructure investment requirements. This involves providing temporary relief to develop infrastructure to comply with service obligations or projects, which are not immediately required by the industry.

Temporary relief from compliance with quality of service obligations has also been suggested by ACI-LAC and ASUTIL. This is because airports are experiencing unprecedented operational circumstances which is putting pressure on operators.

On this basis, regulators should relax service quality obligations until operations normalise, according to the associations.

REQUEST FOR FINANCIAL SUPPORT

Financial measures to support airport operators and other service providers such as duty free retailers is another solution on the table. This will reduce liquidity risk and ensure operational and business continuity. ACI-LAC and ASUTIL believe postponing the payment of bank amortisations and access to credit lines with subsidised interest rates are viable solutions.

The suspension or deferment of social security contributions, corporate and other taxes (including VAT, excise duties) for airport operators and other airport service providers is another option. This could be for a six-month period, emphasised ACI-LAC and ASUTIL.

Finally, the two associations have proposed the relaxation of airports’ local government tax payments for 2020. With the aviation industry highly interdependent,“any relief measures should be considered on a non-discriminatory basis with no sectors benefitting at the expense of another.”

The statement concluded: “We believe states now have a key role to play to ensure the sustainability of the entire aviation system. Airports make themselves available to support governments and other stakeholders to evaluate and coordinate actions to protect the wellbeing of the population and to support the economic and social sustainability of our countries.”

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