Today, the International Civil Aviation Organization (ICAO) urged Central American and Caribbean governments to cooperate with each other and their airlines to achieve a successful and sustainable post-coronavirus recovery. ICAO said that this is essential for the region. Let’s investigate further.
The need to coordinate
ICAO Secretary General Fang Liu said that for cooperation to work, all parties must participate on a clear and coordinated basis. She added that the strength that the air industry has could devolve into detrimental challenges and risks.
“If the North American, Central American, and Caribbean (NACC) post-COVID recovery is to be truly successful and sustainable, your goal must, therefore, be to assure not only your State’s recovery but also the recoveries of your neighbors and their neighbors,” Fang Liu said.
As we know, the Central American and Caribbean countries rely heavily on air transport. We saw a few weeks ago the excitement of three possible new routes for Caribbean Airlines.
The Trinidadian airline eyes a fifth freedom island run. Its objective is to bring together Trinidad and Tobago with Puerto Rico while also landing in a few Caribbean nations. Among the islands selected for this “milk run” are Dominica, Barbados, St. Maarten, and Guadeloupe.
Financial help may be an issue
Even if these countries are aware of the importance of the industry, they’re not all able to provide financial assistance. ICAO said it is mindful of the fact that financial resources can vary significantly from state to state.
For example, the International Air Transport Association (IATA) hasn’t highlighted any relief measures from the Caribbean and Central American regions. And this is unlikely to happen, even when the air industry is essential for this region’s GDP.
According to IATA, Belize receives the most significant contribution, by percentage, to its GDP from aviation in the entire region. Aviation contributes 33% to this Central American nation’s GDP, with about half a billion US dollars.
Additionally this is how much aviation contributes to the GDPs of the following countries:
- Panama: 14%
- The Dominican Republic: 12.5%
- Costa Rica: 9.0%;
- Nicaragua: 6%;
- El Salvadorian: 4%
- Honduras: 3.0%
- Guatemala: 1.0%
Between all these countries, they have a value of exports of about US$104.4 billion. Mexico alone produces four times more than this.
From an airline perspective, the most important carriers are Panama’s Copa Airlines, Avianca in El Salvador and in the Caribbean, we can find Caribbean Airlines, LIAT (in Antigua), and Cubana de Aviación.
How affected will this region be?
Currently, ICAO is estimating that demand in Latin America and the Caribbean could fall between 33.8 and 57.1%. Subsequently, this could mean a loss of between 37.93 million passengers and 61.96 million passengers.
Also, the region could lose as much as US$14.44 billion. But this amount very much depends on the lifting of travel restrictions worldwide.
ICAO has two recovery scenarios worldwide. One scenario envisions significant recovery by September. Another, less optimistic scenario, recovery would only be at about 30-50% within the same timeframe.
What kind of recovery do you expect for the Latin American region? Let us know in the comments.