Wings of Change Americas (WOCA) in Bogotá, Colombia welcomed more than 400 delegates from across the aviation value—including governments and tourism authorities—to discuss the opportunities and challenges in the region.
Aviation in Latin America and the Caribbean links more than 670 million people across 33 countries. In 2024, some 481 million passengers took to the skies, marking a 7.8% increase from the previous year.
Conflict and turbulent geopolitics in other parts of the world are feeding into this growth. “Global airlines are increasingly looking to Latin America and the Caribbean to redirect operations and mitigate geopolitical risks,” says Peter Cerdá, IATA’s Regional Vice President for the Americas. “For example, we have seen Canadian and European carriers capitalize on shifting demand away from the United States by launching new routes to the Caribbean, Mexico, and South America, highlighting how our region is becoming a strategic alternative for global carriers.”
Cerdá adds that this should also serve as a reminder for the many Ministers of Tourism who attended WOCA that airlines are looking for partnerships and favorable conditions to start service. In 2024, according to the World Travel and Tourism Council, the tourism sector contributed $714 billion to the GDP of Latin America and the Caribbean and supported over 28 million jobs.
Increasing connectivity
Airlines have certainly delivered on connectivity when the opportunity and framework are there. In Guatemala, international traffic increased 45% between 2019 and 2024 thanks to an ambitious reform agenda consisting of a new legislation, airport modernization, and a commitment to resolving tax and infrastructure issues.
In Guyana, the administration has reaffirmed its commitment to making aviation a pillar of national development. KLM has opened up a route into Europe and major US carriers have started connecting the country to their major hubs.
Argentina, meanwhile, has prioritized liberalization and competition—signing or renegotiating 14 bilateral air service agreements, opening the ground handling market, and reducing regulatory barriers. By March 2025, this had led to a 26% year-over-year increase in international passenger demand. Aerolineas Argentinas is profitable for the first time in many years.
Overcoming vulnerabilities
“But the truth is that it is still difficult for carriers in the region to make money,” stresses Cerdá. “Globally, in 2025 airlines are expected to achieve a profit of $36 billion or about $7.20 per passenger. In Latin America and the Caribbean, that drops to $3.40—less than half. This razor-thin margin highlights how vulnerable this region is to shocks—from excessive taxation to regulatory burdens and infrastructure constraints.”
Taxes and fees can make up to 40% of the ticket cost in certain countries and these fees are dampening demand and negatively affecting the region. The proposed 26.5% VAT on air tickets in Brazil highlights this onerous tax burden. If the law goes into effect, IATA estimates it could lead to a 30% reduction in demand. So, while the rest of the region increasingly benefits from aviation connectivity, the Brazilian market would contract.
The VAT increase would raise the average cost of flying from $130 to $160 for domestic traffic, and from $740 to $935 for international traffic. This comes on top of the highest litigation rates in the world and import-priced jet fuel, despite local production.
But even in this tough cost environment, since 2015 international airfares in Brazil have dropped 15.3%, and domestic fares 14.9%, showcasing airlines’ resilience and the value they provide.
“There is a small window of opportunity to reduce the VAT and educate the authorities on international best practice,” says Cerdá. “We will explain what a loss of connectivity could mean for the country.”
Regulation and infrastructure
More generally, the regulatory environment needs to be simplified. A particular concern is the rise in consumer protection laws modeled on EU261, even though this clearly isn’t solving the delays seen in Europe.
In Peru, there is a bill aimed at removing airlines’ ability to charge for specific seat assignments and carry-on luggage, which Cerdá likens to “telling a restaurant it can’t charge for drinks or appetizers—only the main course.”
In Colombia, proposed legislation on overbooking and fare caps would drive-up costs and reduce flexibility and similar ideas are under consideration in Brazil, Chile and Mexico…
