Latin American Aviation Market: Growth despite Uncertainty

The IATA Legal Symposium (LS) took place in Barcelona 17-19 Feb 2016 (The Arts Hotel).

I have been asked to moderate a panel on LATAM aviation  regulatory challenges . I will be joined by Ricardo Bernardi (Partner, Bernardi & Schnapp Advogados – Sao Paulo, Brazil), Diego Ferrari, Partner, (Cambiaso & Ferrari Abogados – Buenos Aires, Argentina), Peter Macara (Partner, Beaumont and Son – Aviation at Clyde & Co – Rio de Janeiro, Brazil), Larry Pascal (Partner, Haynes & Boone LLP – Dallas, Texas), Jessica Rossman, Managing Director & Managing Counsel-International, United Airlines – Houston, Texas), and Gonzalo Yelpo, (General Counsel, ALTA – Montevideo, Uruguay)

The panel will address some of the most fascinating and interesting topic that the aviation sector is facing in the region, such as:

The Economic and Political Crises

Latin America’s aviation market demonstrates resilient growth. According to most market outlooks, the sector is expected to grow 6% yearly over the next 20 years. However, current economic and political crises pose significant challenges to the industry. Most notably, the situation in Brazil has lead to major industry losses.  Are regulators really aware of the state of the industry in the region? Have regulators adopted policies and strategies to foster the sector’s development? What is the effect of the problem on airlines? How can the sector better prepare itself?

Ownership and Effective Control Rules

Long-standing ownership and effective control rules are said to be major impediments for the sector’s development. In theory, a relaxation of the ownership and effective control regime could substantially improve the financial position of airlines. Yet, in LATAM, in spite of these rules, consolidation has already taken place. Arguably, air carriers have been extremely creative. The region’s approach to ownership and effective control has not stopped airline consolidation. In fact, LATAM and Avianca are some notable examples. In addition, in many ASAs, when it comes to airline designation, these archaic concepts have already been replaced by the notion of principal place of business. In light of this, one is certainly entitled to ask whether ownership and effective control rules really represent a problem in the region. Why is this still an issue?

Air Transport Liberalization

Low cost carriers continue to gain market share. New carriers have started operations in different markets. Although some countries continue applying a restrictive air transport policy, liberalization is progressing steadily. Will the new political winds in Argentina bring much needed changes to the aviation sector? Will Argentina finally adopt a more flexible approach to market access? Will non- State owned carriers be allowed to succeed in the South? Will Brazil’s economic meltdown force regulators to adopt a more protectionist market access approach? What is the situation in Mexico? Is Mexican air transport policy pro-consumer? Could Chile and some other like-minded States lead the change?

Consumer Protection

Consumer legislation, consumer claims and the imposition of exorbitant fines continue posing serious challenges to the sector. Is regulation really warranted? Why would self-regulation not be a workable solution? Do passengers really benefit from a “regulated” system? Does legislation protect passengers or is it detrimental for consumers?

A number of States have adopted passenger rights regulations. Often, these norms are inconsistent with the international aviation regime. Are air carriers losing the battle? Why do States adopt these types of rules? Is it always the case that a well-known politician was involved in a consumer episode and now he/she wants revenge against the negligent air carriers? Do the regulators understand how the sector functions? Does poor customer service has anything to do with this problem? Should a new treaty be adopted to harmonize different approaches? Is international law the solution? What is the value of the ICAO Core Principles on Consumer Protection?

Come and join us for a fascinating debate with some of the world’s best experts on this field