Air travel declines in Ecuador; Airlines, airports and tourism industry complain about high taxes and airport user fee

May 13, 2017 | 29 comments

Businesses that depend on air travel say they cannot compete with other South American countries due to high taxes and airport user fees that drive up the prices of tickets. They insist they need a break and are pinning their hopes on incoming president Lenin Moreno.

Quito and Guayaquil have seen big declines in air travel.

Airport authorities, airlines and the tourist industry say they are being crippled by taxes and fees that amount to almost half the prices of tickets and, in the cases of promotional fares, as much as 90%. Airlines also complain about high airport usage fees that airports say they were forced to charge when the federal government eliminated a jet fuel subsidy in 2015.

“We are in a crisis and we need a break,” says José Luis Egas, president of the Ecuador Association of Travel Agencies. “We plan talks with President Moreno and his staff as soon as he is in office. He has indicated that he is open to reducing these exorbitant fees on tickets.”

All of the country’s larger airport report declines in air travel in the past three years. The Quito and Guayaquil airports say that international travel is down 30%, while domestic flights show even bigger declines. The larger national airports, in Cuenca, Manta, Esmeraldas, and Loja, all say they are struggling to balance their books as passenger numbers decline.

Marco Subia, a spokesman for the Ecuador Airline Association (Aerlae), says that the elimination of the government fuel subsidy was the beginning of troubles for the air travel industry. “Before that, both international and national air travel was doing very well,” he says. “Without the subsidy, airports were forced to raise fees then the government added more taxes. It was a double blow that we are unable to bear.”

The subsidy, which has been in effect for more than a decade when it was ended by President Rafael Correa, covered 40% to 50% of jet fuel costs. “We understand the need to reduce it and ultimately eliminate it, but it was ordered with immediate effect,” says Subia.

In addition to higher sales taxes on international tickets, a $50 tourist fee was added in 2016 along with higher landing fees of more than $50 in Quito and Guayaquil. The government tax hike on domestic flights was 60%.

Egas says that costs added to ticket prices have eliminated the incentive for airlines to provide low promotional fares that help attract new customers. As a recent example, he says one airline offered an introductory fare of $15 for a new Quito-to-Bogota flight. “That’s a deal that should attract a lot of flyers but once the fees and taxes were added, the cost of the ticket was $182.”

“We need help and will look to the new government to help us,” he says.

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