TBY talks to two directors in the air transport sector on incentives to lower prices and develop new technology for air infrastructure.
How would you assess the air transport system in Mexico?
ADOLFO CASTRO RIVAS I think that the air transportation system in Mexico is very strong in terms of infrastructure and the services offered to passengers. The only problem I can identify in the whole system is how expensive the fares are for domestic travel. The number of domestic passengers in Mexico is very low if you take into account the size of the Mexican population and compare these figures to other Latin American countries. Normally, it is 2.2% more expensive to fly internationally than domestically, but in Mexico you can easily pay $600 for a two-hour domestic flight, while in other countries you pay at least 40% less. Concerning the strengths of the Mexican air transportation system, the most relevant point is the quality of services in the airports. Our airports serve 77 million passengers per year. This figure is very low compared to Chicago’s O’Hare Airport for example, which serves 66.5 million passengers per year, or Atlanta International Airport, which serves 72 million. High prices are certainly one of the main obstacles to increasing traffic.
HÉCTOR VELÁZQUEZ Y CORONA The airport infrastructure is extremely developed in Mexico. Mexico has almost 60 airports throughout the country. The majority of Mexico’s airports are managed by private companies, such as Aeropuertos y Servicios Auxiliares (ASA) and Aeropuertos del Sureste (ASUR). However, AICM belongs to the Mexican government. Our level of technology is very high, and we receive strong support from the government in order to modernize the infrastructure and attract more visitors. At the same time, private companies that manage airports are constantly investing in new technology to improve the quality of the services provided to customers. Compared to other countries, our aerospace sector is still young.
What incentives should be implemented to improve the air transportation industry?
ACR I think that stronger competition in the market could have a positive effect on prices. It should be discussed, as an option, to stop protecting local airlines over international ones. This is a practice that the government has been promoting for many years. I think that if the regulatory system in the air transportation field were revised, it would stimulate competition by allowing new international participants into the market. In addition to that, public tourism entities should promote domestic tourism, given the enormous domestic market that exists in Mexico. The first rule of stimulating the development of a niche market is to create an environment that allows supply and demand to grow. With current airfares, however, this is not going to happen in the short term.
HVC We have to heavily invest in technology. I strongly believe that the government should create new legal frameworks and incentive schemes to promote technological development. The Secretariat of Communications and Transportation (SCT) has directed a large number of investments toward technology, and we will continue to invest in innovations promoted by the government.
How do you see the system developing over the next few years?
ACR We have to bear in mind that the air transportation sector was liberalized in 2005 with the sale of Mexicana by the government. Since then, we have seen several new participants enter the market and an increase in the total passenger volume, thanks to lower pricing resulting from stronger competition. My expectation is that this situation will change in the medium term and the decrease in airfares will be beneficial in stimulating demand for domestic and international travel, as has happened in the last 10 years in the US, Europe, and Brazil.
HVC My expectation is that the air transportation system will continue to grow, due to the fact that transportation, logistics, and other related services drive Mexico’s economic development. The government is making an effort to modernize all aspects of our infrastructure—air, road, and sea. Mexico has deep economic relations with the US, and an integrated transport system will increase our exports. We occupy a strategic position, and a modern transport system will definitely help consolidate Mexico as an international transportation hub.
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