Until last week, airlines moving between Latin America and North America were looking forward to the football world cup tournament in happy anticipation of surging passenger numbers and augmented cargo flows – but then Washington injected a heavy dose of uncertainty into the picture.
First, Markwayne Mullin, the new head of the US Department of Homeland Security (DHS), threatened to withdraw customs and immigration personnel from Newark Liberty International Airport, because of the city’s ‘unsupportive stance” on his department’s campaign to remove illegal immigrants.
Reducing airport security personnel at one of the major US gateways (and a hub of United Airlines) threatened to cripple flows of passengers and cargo into the region and set off alarm bells across the travel and air cargo industries.
Moreover, the announcement caused worries that the DHS would repeat the exercise at other “sanctuary cities”, including Los Angeles, San Francisco, Seattle, Boston, and Philadelphia.
After strong protests from airlines, tourism organisations, and business lobbies, Mr Mullin u-turned on Monday, declaring he saw no need to reduce DHS personnel at Newark any longer. after some concessions from New Jersey state officials.
But on the same day, US trade representative Jamieson Greer announced that Brazil was in violation of Section 301 of the Trade Act and proposed a 25% tariff on a number of imports from the South American nation. Some strategic products are excluded, but Brazilian forwarders and shippers again face uncertainty how business with the US is going to develop.
In the southern hemisphere, airline and travel industry executives in Peru scored a partial victory on 2 June when the nation’s Transport and Communications Ministry and Lima Airport Partners agreed to scrap a controversial transit tax for passengers moving through Lima’s Jorge Chávez Airport.
However, they only cancelled the charge on domestic flights, and maintained the $11.86 levy on international travellers, despite protests from interest groups including IATA, which warned that it could reduce passenger transits by 11%, which could translate into the loss of thousands of flights a year.
The measure is somewhat ironic, as the Peruvian government has been one of the more proactive in the region in pursuing open skies with other countries, most recently with Panama and Australia.
Critics of the transit tax have blamed it for a 10.8% drop in passenger numbers on the Lima-Santiago route in April, a sector that had shown consistent growth in recent years. Reduced flight activity on the route would reduce options for Chilean exporters, notably salmon shippers, to move their fish to international markets. Chile exports over $6bn worth of salmon to over 100 markets around the globe, and the industry has been frustrated with constraints at Santiago’s Arturo Merino Benitez International Airport.
Industry groups accuse the airport of funnelling all investment into passenger development and neglecting cargo, arguing that this has undermined the airport’s competitive position vis-à-vis other air cargo gateways in South America through high operating costs and congestion during peak shipping times.
The airport slipped one notch in the Latin American cargo rankings last year, overtaken by Quito’s Mariscal Surcre International Airport claiming fourth place behind El Dorado (Bogotá), Guarulhos (Sao Paulo) and Felipe Angeles (Mexico City). Quito’s tonnage, 92% of which was flower exports, grew 11% last year.
The airport’s connectivity to the US grew in April, after Avianca Cargo signed an agreement with Amazon to take over northbound capacity on five new weekly flights of the e-commerce giant’s freighter arm, between the Ecuadorian capital and Miami. It was the second arrangement of this kind between them, following a capacity agreement on the Bogotá-Miami sector last year.
The deal gave Avianca additional capacity to haul flowers to the US for Mother’s Day. Last year the carrier added two weekly flights from Quito via Miami to Maastricht and Zaragoza.
According to the most recent data from WorldACD, tonnage from Central/ South America to North America fell 20% between 11 and 24 May from the preceding fortnight, reflecting the end of the Mother’s Day flower rush, which sent rates 13% lower.
The region’s global export volume in the 11-24 May window was down 13% from the prior fortnight, but 6% higher year on year, while rates declined 5%, but were up 10% year on year.
Shippers and carriers in the region must hope they will be spared more sudden policy announcements from Washington while they are moving passengers and cargo to the host nations of the football event.