Airlines cheer as Chile reduces boarding fees

SANTIAGO – The executives of the airlines that operate in Chile are happy after Sebastián Piñera’s administration announced a 20% reduction in the boarding taxes, which will reduce air fares.

Announcing the reduction on his official Twitter account, Chile‘s Minister of Finance Jose Ramon Valente, informed that the tax will reduce a further 10% in 2019 and other 10% in 2020.

The reduction is effective immediately. International boarding taxes were USD30 and will reduce to USD26, then USD25 in 2018 and USD24 in 2020.

“The announcement of the Government is very good news,” said Gisela Escobar, Vice President of Corporate Affairs at Latam. For her, the measure “crystallizes an effort of years to propose a rate reduction and that will benefit all passengers.”

In that sense, he added that “the reduction of rates will be especially noticeable for passengers who opt for discounted rates since they will see an even greater reduction in the final price of their trips”.

For his part, Holger Paulmann, general manager of SKY Airlines, revealed that at the top of the airline “we are super happy with the announcement.” The above, because “this is what the client wanted and we are seeing that for the first time the authority is listening to the client”. And at that point, the top leader of SKY is critical: “All that money went to the authority and the services of the concessions have not necessarily gone in improvement (…) The boarding fee went from being a financing for the airport concessionaire to finance part of the Treasury of the country and simply a way to collect more taxes.”

In fact, he recalled that “this – to lower the rates – we tried with the past government and we had a very good reception, but on that occasion it was the Ministry of Finance that stopped it in its tracks”.

“The potential increase in the number of passengers is going to be higher than the rate of embarkation (…) This will be a multiplier effect and a catalyst for the Chilean economy to improve” Holger Paulmann, general manager SKY said.

Estuardo Ortiz, CEO of JetSmart, also valued the announcement made by Minister Valente and emphasized the economic benefit it will bring both for the country and for the industry. “Since the beginning of operations, more than a year ago, we have been aware that the market has a lot of potential, and that when prices go down there will be a market stimulation, there will be more passengers, more customers traveling by plane,” he pointed.

In that sense, he explained that “the market has grown more than 20%, product of the reduction of prices and new routes. Therefore, the reduction in boarding fees is entirely coherent with this new stage in Chilean aviation, with this aviation revolution, with this modern evolution, which allows more and more people of all socioeconomic levels throughout the country has the possibility of being able to travel by plane”.

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Acting as South America’s spine, Chile is home to around 18 million people, while 6.45 million people visited the country in 2017. Visitor numbers climbed by over 13% last year, while various sources report that international visitors are expected to increase by 8.5% this year to pass seven million.

Last year Chile’s commercial airports handled 22.32 million passengers, up 11% versus the 20.09 million they handled in 2016.

Overall the number of annual passengers flying from Chile grew by 130% between 2009 and 2017, going from 9.71 million to 22.32 million.