Probable imminent collapse of air connectivity | Probable colapso inminente de la conectividad aérea

By  Daniel Salazar Castellanos, Bloomberg Linea; Eju.tv:

Bolivia could face an “imminent collapse of air connectivity”; understand why

Amid the dollar shortage Bolivia has been facing for months, the Andean country faces other significant challenges, such as the high cost of fuel (US$3.75 per gallon) and “the lack of adequate bilateral agreements,” according to ALTA

Industria aérea boliviana.
(BoA)(Shutterstock)

Bolivia could face an “imminent collapse of air connectivity” due to escalating measures that place airlines in an “unsustainable position” amid the dollar shortage in the Andean country, the Latin American and Caribbean Air Transport Association (ALTA) and the Bolivian Airline Association (ALA Bolivia) warned on Wednesday.

The measures imposed by YPFB Aviación, responsible for selling aviation fuels (Jet Fuel and Av Gas), include requiring payments from companies to be split 50% in Bolivianos (BOB) and 50% in U.S. dollars, payments in cash, and the return of previously made advances, according to these sources.

“These measures have been rejected by the airlines, and some are already evaluating the cancellation of their operations in Bolivia, a scenario that would have catastrophic consequences for the country’s connectivity,” they stated.

They explained that for over a year, airlines in Bolivia have implemented strategies to adapt to the shortage of foreign currency, “while also bearing high costs for international remittances, which in some cases exceed 30%.”

However, “the imposition of payments exclusively in dollars, in a context of limited foreign currency availability in the Bolivian financial system, has pushed the sector into an unprecedented crisis.”

According to them, these measures “represent a direct blow to the sustainability of air operations in the country.”

“If this situation is not reversed, Bolivia faces a collapse in its air connectivity, which would impact millions of citizens, the national economy, and foreign trade,” they said in a statement.

This year, Bolivia has experienced a 4.9% slowdown in total passenger traffic compared to 2023, particularly affecting the domestic market with an estimated 7.9% decline, while the international segment shows a 5.8% growth, according to ALTA data.

ALTA projects that domestic traffic will reach 5.1 million passengers this year, down from 5.5 million the previous year, “highlighting the difficulties in recovering the domestic market,” the association stated in a report published on December 2.

The travel and tourism industry contributed 5.7% to the country’s Gross Domestic Product (GDP) in 2019, and this figure is expected to reach 5.5% in 2024.

ALTA and ALA Bolivia pointed out that “total exports in 2023 amounted to US$13.6 billion, of which 24% were transported by air. Despite its low volume, air transport is the second most important means in terms of value, after land transport.”

To counter the situation, they call for establishing sustainable conditions for airlines, allowing payments in Bolivianos and eliminating any cash payment requirements.

They also demand ensuring priority access to foreign currency for the aviation sector at the official exchange rate, stabilizing operations, and avoiding onerous fees.

Additionally, they urge the initiation of “immediate dialogue between authorities, suppliers, and airlines to find viable and sustainable solutions.”

The number of active international routes in the country decreased from 23 in 2017 to 19 in 2023. The airlines operating international routes have also dropped from 11 to 10 over the same period.

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