Air Canada will open a new route and says how much tickets could go down if taxes go down

15 years ago Air Canada landed in Colombia. From its first flight until today, the airline has faced several challenges, among which “to convince the Colombian tourist to see Canada as a tourist destination, since Canada has always been seen, by tradition in Colombia, as a student destination” , said Juan Calvo, the company's manager for Colombia.

Another challenge that Calvo highlighted is the one that has to do with the tax burden. According to the executive, if Colombia reaches a level of tax burden between 30% and 34% in air tickets, "market growth would be very interesting both domestically and internationally."

What have been the main challenges of Air Canada in Colombia during these 15 years?
The challenges in the Colombian market have been several. Especially stands out to convince the Colombian tourist market to see Canada as a tourist destination, because it has always been a quintessential student destination. Especially in the last three years, which correspond to the time in which I have been a manager, the objective has been to convince the Colombian to have Canada on his radar as a vacation destination.

How do you see the regulations of the air sector in Colombia?
Another challenge has been everything that has to do with the Colombian authorities, to make them understand how the Air Canada Rouge model works, which in Colombian legislation does not yet exist. It is working on that, since Rouge is an Air Canada product that operates with a different code, but is still 100% of Air Canada, even the sale is carried out on the same page.

What does Colombia need to improve its air competitiveness?
Another challenge has been El Dorado airport, which is a very good airport and has had a huge change in recent years. But, Bogota needs to grow more at its airport to be able to meet all current and next demand. The rest of airports have seen that they have improved in recent years, but, for example, Cartagena is still a problem.

This year there have been several discussions about the legislative regulation in air matters, what position do you have regarding the decrease in the cost of taxes on tickets?
That is one of the challenges. Obviously, the Colombian market so far is starting to grow and another problem is the tax rate of the tickets, where more than 50% of the total value of the tickets corresponds to taxes. Colombia is one of the few countries in the world with such a strong tax burden, which prevents the market from developing at the speed of markets such as Brazil, Mexico, Chile or Argentina, where the tax burden is not as strong in the tickets.

From the airlines, how are you working to advance this issue?
Among airlines we have relied heavily on Iata to open a dialogue with the Government to explain, with real numbers, that if the tax burden is lowered, what will be there is an important growth of travelers.

Have you made accounts of how much the air sector could grow if the cargo were lowered?
The specific exercise has not been done. But, it is logical that if taxes are lowered the door opens for more people to buy the ticket. For example, the promotional rate is around US $ 175 (round trip), that is, it costs around $ 600,000. But, the ticket ends up costing, with the tax burden, about $ 2 million. This would change if this tax burden can be lowered to the margins of other countries of 30% or 34%. With this, we would be talking that this ticket would end up at $ 1.6 million or $ 1.7 million.

So, would an ideal rate be between 30% and 34%?
Yes, I would think that if Colombia reaches these levels, market growth would be very interesting both domestically and internationally.

How will you celebrate Air canada his 15 years?
Air Canada announced a new year-round service between Montreal and Bogota, starting June 2, 2020. Flights will operate three times a week aboard the Boeing 767-300ER of Air Canada Rouge.

How was the process to achieve the new route?
That is going to be the itinerary that is going to be handled. Obviously, due to the bilateral treaty between Colombia and Canada, which includes 14 frequencies per week, we were forced to reduce two frequencies along the Bogota-Toronto route, starting June 2.

With that decrease, how many frequencies are left in total?
This would mean that Bogota-Toronto with five frequencies would remain, Bogota-Montreal with three frequencies and Cartagena-Toronto with three frequencies. In this list are the 11 frequencies that correspond to us according to the bilateral treaty, because the remaining three belong to Air Transat.

Could they at some point resume the frequencies they are removing?
If Colombia and Canada were to negotiate an extension of the bilateral treaty, we would sit down again to think if we return Bogota-Toronto to daily service. But, for now we would look like this.

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