Navigating Regulatory Challenges and Advancing Harmonisation in Latin American Aviation

Transcript

Michael Bell:Honor to be here again. Thank you for the opportunity to moderate on this important subject. We've got a terrific panel that CAPA has assembled for us. I'm going to introduce them to you from your far right coming my way. Peter Cerdá, who you've already heard speak today. Peter and I always meet outside Miami, even though we live in Miami.

Ángela Orozco:That's right.

Michael Bell:Great to see you again, Peter. Thank you. You touched on a few of the themes earlier in your discussion, so welcome to bring those again here. Then we have Cuit Gutiérrez, who is the Senior Vice President, Institutional Relations, Government Affairs— Government Airport Industry Affairs at Aeroméxico.

Cuitlahuac Gutiérrez:Welcome, Cuit. Thank you.

Michael Bell:Ángela María Orozco Gómez, Senior Vice President of Corporate Affairs At Avianca. Welcome, Ángela.

Ángela Orozco:Thank you.

Michael Bell:Michael Gill, Director of Legal Affairs and External Relations Bureau at ICAO. Thanks for coming down.

Captain Rafael Bárcenas:Thank you.

Michael Gill:Good morning.

Michael Bell:Montreal.

Michael Gill:Nice to be here.

Michael Bell:And immediately beside me, Captain Rafael Bárcenas, who's the Director General of Civil Aviation here in Panama. So we have got the territory covered here in terms of different parts of the geography, different parts of the value chain, operator, regulator, etc. The topic as discussed is navigating regulatory challenges and advancing harmonization. Why we keep having panels on this subject is really my big question because it seems like a perennial issue in the region, maybe not just this region, but it's a big one because I've heard people say, hey, you can have all the growth ambitions that you want if you don't have the infrastructure, if you don't have liberalization, if you don't have the harmonization. is either difficult or not possible. So that's what we want to get into. And to kick it off, I've asked the panelists to come prepared to share their response to this question with one word and one word only, and I'm going to hold you accountable for that. And the question is that if Latin America could— and the Caribbean could implement one aviation reform tomorrow, just one thing in one word, that would have the biggest impact on connectivity and economic growth in the region, what would that be? So let's just collect the words here. Peter?

Peter Cerdá:Overregulation. I guess that's 2.

Michael Bell:Is that 2 or 1 word?

Michael Gill:I don't know. We'll let you—

Michael Bell:it's a compound word, so.

Peter Cerdá:It's compound. Okay.

Michael Bell:Overregulation. Cuit?

Cuitlahuac Gutiérrez:I could say operational complexity.

Michael Bell:That's 2 words.

Cuitlahuac Gutiérrez:Complexity.

Michael Bell:Complexity, okay. You guys are giving us the problem. I asked you the one thing you would change. So is it to change the— to reduce the complexity?

Ángela Orozco:Yes.

Michael Bell:Okay, very good. Ángela?

Ángela Orozco:Harmonization.

Michael Gill:Okay.

Michael Bell:Easier said than done, but we'll wait to see how we're going to get there. Michael?

Michael Gill:I promise we didn't discuss this before, but harmonization.

Michael Bell:When 2 people beside each other say the same thing, one of you has to leave the panel. Thank you for that. Interesting. Rafael?

Captain Rafael Bárcenas:Liberalization.

Michael Bell:Liberalization. Very good. Good food for thought here. I'm going to start with you, Peter. Let's start with the topic of harmonization. Obviously, you guys push for this in your capacity at IATA, at ALTA. The more harmonized, the more standardized, the easier it will be for your members to operate in the region. My question comes back to, why do we keep talking about this over and over again? Are we making progress? Why is this still a big issue?

Peter Cerdá:I think we are making some progress. We're not making the progress that would help accelerate the industry to new heights. I think part of it's the geopolitics of our region to a certain point. We have significant— we have drastic changes in governments from right to left, left to right to center, and those come with different ambitions and objectives. I think our industry many times is caught in the middle. Yes. We're still— I say this many times— we're still treated as a cash cow industry. We're still treated as if we were an industry of the rich instead of really considering air transportation as really a public mode of movement in our region because of the lack of other modes of transportation, high rail, good highway systems. We don't have this.

Michael Bell:We need the aviation, right?

Peter Cerdá:You need it. You need it socially. You need it economically. But governments— I said this before— if we could just copy and paste Panama.

Michael Bell:Well, I'm just going to take you up on that. Rafael, come in here. We've heard Pedro talked about it. Peter talked about it earlier today now. What's wrong with being a cash cow if it's for everyone's benefit? I mean, it sounds to me like the airport, the airline here are making money for everybody. Why isn't this great model you have here replicated in every major market in Latin America?

Captain Rafael Bárcenas:I think it's a philosophy thing of every market wants to protect their own. They want to protect their employers. They want to protect their employees. Protect their airports, their airlines. At the end, that's why I said liberalization. We need to get in a way where all the Latin American countries speak the same language, where we can get human resources anywhere, where our airlines can operate without restrictions or regulatory affairs that don't match their own. At the end of the day, the perfect scenario even would be that all our airspaces would be based on the same fees. We are chasing fees all around. We have a neighboring country that charges 40% more, then you have somebody else that charges a lot more. Maybe all this harmonization as well, using the words in the panel, could bring great benefit to the region because right now there's a lot of disparity between everything. That's something that needs to be addressed.

Michael Bell:Ángela, you have the interesting situation. You've been on the government side, now on the operator side. You're in an airliner group that manages across different regions, right? Tell us a little bit. You're seeing the situation in Panama. What is your observation on what needs to be done to achieve this greater liberalization or harmonization?

Ángela Orozco:What would you change? Well, as I told you, because of the size of our market and because of our necessity of strong connectivity around the country, which is completely a different thing from Panama, which doesn't have a strong connectivity within the country, it's an international hub, I believe harmonization is the answer. Mainly, and this is what I saw, is because we need to guarantee that we have harmonized standards. That we don't duplicate licenses, certifications, and that would really help. But still, we don't think this is the sector that needs to be necessarily don't have regulations. We need to have regulations. What we need to have is harmonized regulations and harmonized interpretations. If we do that, that mainly will be very important. But there's another thing in this side when we're talking about harmonization is We have still very high taxes and charges on our connectivity. When you look at the ALTA study that they did in 2023, Latin America and the Caribbean has the highest tax and charge burdens on tickets. It's around $44 per ticket. On average, it's like 29% of the ticket fare.

Captain Rafael Bárcenas:Really?

Ángela Orozco:In Colombia, it's 38% of the ticket fare, and that's charged to the passengers. Air transportation is not a luxury in our countries. It's not a luxury in Mexico.

Michael Bell:Did you try to make the point that if they took that 38% to 25%, the stimulation effect in the economy would be huge?

Ángela Orozco:Absolutely, and we have examples of it. When we had the COVID problem, we reduced our VAT tax from 19% to 5%. This is why Colombia was one of the 4 countries that strongly reconnected air transportation, and it grew much more than many other countries in the world, and it was the direct impact of reducing these VAT tax. Actually, we have seen how this has increased, even taking a look at what has happened in the liberalization of tariffs in Colombia. We just recently made a study, and they took— and we started 2005 to 2026, and our great liberalization was done in 2012. Actually, from that moment on, Our tariffs have increasingly gone down. In real terms, they have reduced substantially, both internationally and domestically. So yes, reduction on taxes and making these smaller, it has a great impact on consumption.

Michael Bell:You mentioned something, Cuit, in our pre-discussions here about the— what are your tax fee, whatever— on connecting traffic in Mexico. Tell us about that, how that hinders your growth, if you will, and how are you going to get that changed, if you will?

Cuitlahuac Gutiérrez:Yeah, thanks, Mike. No, I mean, that happened when really authorities or countries, they want to do some harmonization. I mean, that part is good. I mean, the problem is when they just try to do some imitation, and because really they need to tailor a little bit any changes. The case of Mexico, and following this conversation, We have a fee for international connecting passengers that had been an exception for years, putting Mexico in a very nice position, like a hub-and-spoke basis, Mexico City. 3 years ago, well, that's because the change in the regulation, that exemption was rejected, and then we are now— this is not fee, they said, it's just like a—

Ángela Orozco:A tax.

Cuitlahuac Gutiérrez:a fee to the ticket, but now international passengers connecting from Central, South America through Mexico, like we do in Aeroméxico, to Asia or Europe, they need to pay around $80. Now there is a proposal in the Congress to increase by 35%. This will put Mexico—

Michael Bell:We're going in the wrong direction.

Cuitlahuac Gutiérrez:Yes, yes, both directions. This will put Mexico in a position completely uncompetitive with the rest of the hubs Like Panama or Lima or Bogotá. That part is that without a further and strong analysis is what we are focused now.

Michael Bell:Isn't this a simple ROI calculation if you show them that if we reduce this from 80 to 50, here's the stimulatory effect on traffic, here's how much new spend you're going to have at the airport concessions, etc.? Why is it so complicated?

Cuitlahuac Gutiérrez:It's so complicated because for them and just Taking Peter's words, how governments in Latin America have changed, where we are today in a lefty government, for them is, okay, but I'm getting money some way. What they haven't seen is that this traffic has been reduced, and of course they are getting less money than if they have been exempting these passengers to connecting. For them, it's quite a closed view that really the benefits or the impact, these kind of decisions bring to the table. It's where we are today. You are not getting money. Do you really have the chance to get more money by increasing this traffic?

Michael Bell:Short-term pain, long-term gain, right?

Cuitlahuac Gutiérrez:Yes, yes. That part, it's very difficult to translate in the practical things.

Michael Bell:Michael, come in here on this discussion. Peter started with geopolitical. He was referring to, I guess, the oscillations within the region Geopolitically, it sounds like, you know, in your guys' role globally at ICAO to help set these standards, ensure the harmonization, there might be a distractive effect of the bigger geopolitical issues going on. Tell us about that and how that affects your day-to-day work.

Michael Gill:Thanks, Michael, and thank you to CAPA for the invitation. I did want to say it's really important and a welcome opportunity for ICAO to be involved in a meeting like this. sometimes tend to get caught in our Montreal bubble, ivory tower if you like, and get somewhat distanced from the realities on the ground. So hearing from industry stakeholders and from our member states in this kind of meeting is really crucial. You know, the overall ICAO system is based around this theme of harmonization, right? Because we develop harmonized standards, what we call the Standards and Recommended Practices. It's the annexes to our convention, the rulebook on any range of topics from Personnel licensing, aerodrome design, environmental standards, etc. That's all done on a harmonized global basis through, you know, all the way through the governance process. We then have our universal oversight audit programs, both on safety and security, where there is a common standard of audit applied to all member states. And then we try and provide implementation to support to member states on a harmonized—

Michael Bell:This is the no country left behind.

Michael Gill:No country left behind. I'm happy to develop that theme. To go to your question, as you say, we're in a situation where there are a number of geopolitical tensions in different regions, not just in this part of the world, but in many other regions as well. They trickle down into the work of our governing bodies, our Assembly and our Council, because they're often asked to resolve geopolitical disputes which have a direct impact on international civil aviation. Yes. Whether that's overflights, closures of airspace, whether that's shootdown of aircraft, whether that's disputes around application of environmental regulation. Our governing bodies have to address those topics, but it is a distraction in the sense that it takes up time, it takes up energy, and it does create some political tension when we're trying to work on the system which I mentioned of development and implementation of standards on a global and harmonized basis. To be frank, we're seeing more and more of it in the past 2 or 3 years.

Michael Bell:More distraction?

Michael Gill:More distraction. I guess it's a reflection of the geopolitical realities everywhere in the world, but aviation is not immune to that, and ICAO is not immune to that.

Michael Bell:Rafael, we've heard that the ROI is there. What is different here in Panama that has gotten the government here, presumably, to see The industry as an economic stimulant versus something to pull money out of, if you will. What is the— if there was one thing you could communicate more broadly to the region to change, what is the lesson learned here?

Captain Rafael Bárcenas:Panama has always been a country that lives off the open skies, so we try to sign as much open skies agreements with every country that we can. We feel that that's also a threat to growth, where we have countries that still have limitations of the amount of frequencies or flights that you can have to those countries. There's also, on that same part, the 5th freedom rights that some countries exercise and others don't. It's kind of a political issue that we have understood that opening up to any airline, to any type of open sales agreement, helps our hub bring more passengers. As far as— and you said something interesting— putting in and not taking out, well, that's not quite like that.

Michael Bell:They're doing both.

Captain Rafael Bárcenas:Yeah, exactly. But we've did quite a bit of investment in Tocumen International Airport. We've had challenges as well to keep that hub connecting in Less than 45 minutes. Recently, Panama is the pioneer first country in the world to implement the one-stop security model, which guarantees safety in our hub model, but still allows you to connect in that 45-minute threshold that we have.

Michael Bell:Interactions.

Captain Rafael Bárcenas:That has been very beneficial to comply with ICAO regulations and keep our model intact. I think right now we're more looking into putting into it than what we get out of it. Obviously, we have an airport that's demanding about $500 million more in investment just to make it through the next 10 years, and that's very important. We need to grow capacity, and that capacity is solely based on infrastructure development that we're doing right now.

Michael Bell:I wonder if one of the takeaways here is that Panama sort of had to do this because of the small market. You were sort of forced into a situation where you're not trying to protect your local market, you're trying to open things up, right? So the answer is each of the other countries have to shrink, if you will, and kill their domestic market, right? I'm joking. Let's— Peter, you, if anybody here, has seen this issue of harmonization, liberalization at work the longest, the broadest across multiple markets, etc. You've heard here some of the issues. How is it that you've got this dual role at IATA and ALTA? How are you guys adapting your tactics, etc., to try to have even more impact? You've had some success, but what are you— what is your tack, your approach to continue this?

Peter Cerdá:Well, I think one of the things we're having to up the game. You know, in the past, our key stakeholder when it was industry with governments used to be the civil aviation level, ministry levels. But many— since the pandemic, we've seen that different ministries within the government have taken on a more important role in terms of determining the future of our industry. So When we're talking about fees and charges, many times it's not approved by transportation. It's approved by the Ministry of Finance or Economy. When we're trying to stimulate a regulation, it comes from the Congress. So we're seeing different actors within the government that are playing a bigger role in how airlines operate and grow in the region. So we're having— to diverse the way we advocate and how we explain. It's really becoming storytelling. It seems very simplistic, almost like to a child, but it's beginning to tell a story on why aviation is so important. You would think our governments understand. To Rafael in Panama, I think he's being very, very polite. The reason Panama works, it's because Regardless of the political party in power, regardless, left, right, middle, upside down, forward, backwards, they understand that the canal and air transportation are the 2 most important social and economic enablers in the country. They get it. And they've gotten it, you know, I joke about, you know, when Pedro said it when he entered the company 30-plus years ago, that hasn't shifted in 30 years. It shifts in our governments throughout the region consistently. So it makes it very difficult for an industry like ours that every 4 years that we've built a relationship, we've educated the government, we've made some headway, roads on some things, and then we have to restart again. And that's so challenging for an industry that we're having to adapt to constant change I said this in a previous panel. This region has been extremely successful in acclimating to change and to challenges. Imagine if we had the Panama in Colombia, in Brazil. This industry, it wouldn't be 0.6 trips per capita for Latin American and Caribbean citizens. It'd probably be 2 or 3.

Michael Bell:Let's pivot to a related topic, which is infrastructure. I'm going to start with you, Ángela. You said in our prep, liberalization is useless without infrastructure. You've seen this from both sides of the house. Talk about the situation as you see it from Avianca within Colombia or the other markets you work with, what you face there as the biggest challenges in that way.

Ángela Orozco:I believe, and I want to link this to what I said before, is I believe liberalization or harmonization is useless Unless you have infrastructure. In that sense, we have a big issue in infrastructure in Colombia, actually. It's not only the Level 3 of El Dorado Airport, but it's also congested, and we still have a lot of operational issues that could be improved substantially and that will improve our capacity mainly. Of course, we have regional challenges too, but I believe part of the challenge, as Peter mentioned, is—

Peter Cerdá:Yes.

Ángela Orozco:how we can educate not only governments but the public opinion. What I really faced when I was in government is that really people doesn't know the complexity of this industry. There's still a perception, at least in Colombia, but I think in many other countries, that there's only high-value customers, that still air transportation is for rich people, that this is a—

Michael Bell:We can afford to tax them, basically.

Ángela Orozco:Well, we can afford the tax. We can use this industry to I don't know. It solved other issues, political issues, social issues that had nothing to do with this. Still, and this was mentioned before in another panel, is really public transportation in countries such as Colombia, Mexico, Brazil, really is a critical service for our societies. It's a critical service for the common people, mainly because we have different regional development poles, and these regional development poles are far away from the capitals, and we don't have— I don't know, we don't have trains. There's no way to get to a regional pole of development unless you take an airplane. The alternative in Colombia is 14 hours by car, 15 hours by car, and that's the same case in Mexico, and that's the same case in Brazil, for example. As long as they really understand, and this is not a matter only of governments, It's also a matter of the society and the public opinion. The perspective of this industry from the entrepreneurial side and only from the passenger side, it is very difficult to have different governments not seeing this industry as the one that's going to finance everything.

Michael Bell:I'm interested in the group's view on this issue. How much of that is airlines aren't always seen by consumers as their favorite industry? They like to criticize it. They think they're trying to rip them off with the pricing or whatever. Is this a goodwill issue that they're not stepping up to advocate for the industry that they absolutely need?

Ángela Orozco:Well, I believe, and this is what I say, I believe the reason why you have to convince people once every new government comes, it is because the country doesn't really know how, for example, how a tariff or a ticket is— how costs within the tickets As long as you have a common knowledge about the industry, the small margins of the industry, and how a ticket is really— how costs are allocated within a tariff, they will defend the industry because they really need to get in a 1-hour flight from one city to another. That's true. But if nobody knows, if the perception is that this is a rich industry, Yes. that only having airplanes is because you're really very profitable. Well, they're always going to see these—

Michael Bell:Or understanding that the reason my fare through Mexico City is $80 higher is because of this hidden tax, right? Infrastructure in Mexico City, you guys have had your own particular challenges that way, right? New airport under development, shelved. Now you have a second big airport, Decent-sized airport that you must sort of have this dual airport system. How is the infrastructure situation playing out for you guys at Aeroméxico?

Cuitlahuac Gutiérrez:Well, I mean, that's of course for us in Mexico, it's a very challenging situation from a few years back. So having Mexico City Airport as our hub-and-spoke airport and the main airport of the country in the conditions that we used to have, at least not in the last year that the government finally invested a lot of money on that airport, but at the end, it's exactly the same infrastructure. It's nice, it's different, looks different, look and feel, but at the end, it's not going to be the infrastructure that we need for the future demand. I think that's the point. We as an airline and an industry in Mexico, that's fine. We certainly can live with these 3 airport systems, Toluca and AIFA and Mexico City. But what will come next? We have private airport groups in the country that they are investing money, Guadalajara or Monterrey, some private associations with the government as well. But what happened with the metropolitan airport system? This really— we are very concerned about the future of the airport because this airport, the City of Mexico is sinking and then the terminals and everything is moving. So what will come for the next 10 years? That's exactly the point where we are. Then we have a capacity reduction at Mexico City, government decisions or not. It's good. That's improved efficiency of the operation as well. But then it's not only the infrastructure for the terminals. We need as well investments on the airspace infrastructure for the ANSP, the navigation system provider. If we are not, again, taking the word, harmonize all these procedures, all these organizations, Everyone really is going to be stuck in the process. Then we, the airlines, are the ones affected because taking these words as well with the customer is, why this— the taxiway is taking 45 minutes in Mexico City? It's because the airline. No, I'm not. Tell the ANSP or tell the airport that the airport is congested. They need to do some works in the runways. They need to do whatever. Then we have long, long queue lines for the passengers. to finally— that really does impact the customer experience for them. Then for them, we are the face of all this industry.

Michael Bell:Sure. Michael, come in here. You mentioned that the No Country Left Behind initiative, and maybe you could take a few minutes to explain that, is not only about creating more harmonization but also facilitating the development of infrastructure. How are you guys trying to do that to make sure that maybe some of the secondary countries or secondary cities No Country Left Behind was launched in ICAO way back in 2014 as an initiative.

Michael Gill:It was essentially to recognize the difficulty that some member states were facing in implementation of these standards and recommended practices into their domestic law. Some states, simply because of the state of development of their aviation sector, they just don't have the resources to be able to finance a standalone aviation regulation department, or some states don't have the actual expertise. No Country Left Behind was a way to try and share that burden across the entire ICAO membership. Interestingly, last year at our ICAO Assembly, and just about a year ago, No Country Left Behind was even strengthened as a strategic objective of the organization, recognizing that if aviation is to reach its targets for the next 25 years, net-zero emissions, zero fatalities, then No Country Left Behind is absolutely fundamental to it. Essentially, it's to try and recognize that certain states need capacity building, they need training, they need the sharing of expertise, but they also need implementation support both from a regulatory and an operational perspective, actually bringing those global regulations into practice on a day-to-day basis.

Michael Bell:Are they open to that? I'm going to admit some naivete. This topic area is not my power alley, but in our briefing, you said something like you guys set the standards, but you really don't have teeth to ensure compliance. So on things like this, don't you need a kind of open ear on the part of the needy recipient, and you run into issues that way?

Michael Gill:I mean, we don't have teeth in terms of compliance. We can't enforce the application and implementation, but through our No Country Left Behind initiative, we do ensure that states who need it have the expertise. We mobilize resources. We provide technical expertise or consultancy. A classic example is the airport here in Panama, where ICAO consultants helped in the development of the airport plan. I think it's fair to say, on the safety and the security side, we have achieved pretty high levels of harmonization of regulation in this region, but also on a global basis. Where I think we're seeing challenges is on the non-safety security side. Here, I'm talking about environmental regulation. I'm talking about consumer protection. I'm talking perhaps about regulation on protection of passenger data, where we are seeing a much more fragmented environment.

Michael Bell:I think, Ángela, you mentioned even things like moving an airplane or moving parts around.

Ángela Orozco:These are not necessarily safety-related or may not be, but they're areas that introduce friction into your Well, actually, when we're talking about harmonization, we're talking about also safety, and it's how do we get that to practice, because we have the rules standardized, but we still don't have mutual recognition for licenses, for licenses for crew, for other type of crew, for pilots, also even for safety standards. We really have harmonized rules. We have a Latin American initiative We really believe on the rule side, the rules are harmonized, but we still have different interpretations from the different authorities. We don't have common guidelines, and we are subject to whoever interprets this and also whoever wants to put other policy issues within the interpretation of these guidelines. I believe as long as it's not not having regulations, it's having them very technically and responsible. And also, the implementation and interpretation of those rules need to be also harmonized. And if we have mutual recognitions, for example, we would much easily deploy not only airplanes but also crews to the different markets as long as the markets need it. And still today, we cannot do that because we are subject to different interpretations. And of course, geopolitics had to do with it, because sometimes these technical rules are interpreted according to the Rafael, you mentioned the ANSP harmonization.

Michael Bell:I mean, that's sort of maybe a subject that doesn't get a lot of attention. We know there's issues in Europe that way. What needs to get done to simplify, harmonize on that score across the region?

Captain Rafael Bárcenas:Well, I have to agree with Ángela. We have definitely to work on the harmonization of Most of the rulebooks, I guess there will be some sort of discrepancies on very small things within boundaries, but this is making the job of the aviation industry very difficult. I can tell you examples of countries where importing a part to fix an airplane is almost impossible or takes a month and a half without signaling at anybody, but— Same thing with MROs. You travel in an airline to another country, but you have to certify everybody that gives you service in that country. How expensive is that? That's something that we need to get. If we have all the authorities that are under ICAO, 192 countries, and we all have technically the same standard, why are we not recognizing the capabilities— Which one are you referring to?

Michael Bell:It sounds like that's one area that just advancing that alone could help.

Ángela Orozco:It will give a lot. That's more liberalization than any agreement.

Michael Bell:How do you make that happen, Peter, the mutual recognition of these certifications?

Peter Cerdá:There has to be a government will. You have to bring the decision-makers to the table. I don't know if we'll talk about ALAS, which is the An agreement between 6 states to basically try to emulate what's being done in Europe. The picture is great. Now, how do you implement it? And how do you take away your personal defenses to say, I'm going to have to give. We're going to have to be seamless. We're going to have to be harmonized. We're going to have to have same cost structures. in place to do it. And when, you know, you talk about ALTA and people think, oh, this is a great thing to do. Well, most of these things that they've been discussing have been discussed in Mercosur agreements and in the Fortaleza Agreement, Andino. It's— nothing's invented. Everything's invented already. We just need to copy.

Michael Bell:You know, a lot of the theme here is government willingness So let me pick up on one of the questions related to that. I remember when President Trump came to office, he said, we're going to throw away all these regulations and simplify things for business. The question is, does the shift of many Latin American governments to the right paint a better picture for the future of deregulation and lower taxes? Who wants to take that one? Anybody?

Peter Cerdá:Ángela.

Ángela Orozco:Well, I wasn't talking about deregulation. I was talking about how we could really, what we have already harmonized, take it into practice. I believe that hasn't to do with the right or left. It has to do with understanding the importance of connectivity for the social development of our countries.

Michael Bell:Which is the Panama story.

Captain Rafael Bárcenas:I don't think, for that question, that right or left will make taxes easier. It's a global initiative. It's a Latin American initiative that will work that, not really a government.

Peter Cerdá:Michael, I have— I've been wanting to give this— throw this data out. You know, when we talk about one sky, you have to have efficiency. And obviously, the industry understands, the airlines understand there's a cost associated with flying to an airport over an airspace. Now, when it becomes abusive, that's where it goes wrong. In Argentina, just— and I have no issue about naming some countries— in Argentina—

Michael Bell:Go ahead.

Peter Cerdá:They just raised their ATC Argentina. Argentina, $267 per 100 nautical miles. Its neighbor, Chile, charges $18 per 100 nautical miles. So when we're talking about this great ALAS initiative, well, what is Argentina going to do to be at par and bring everyone to balance? Again, we understand there's investment. We have to improve infrastructure. We have to improve it because that's how we're going to enhance safety, we're going to enhance efficiency, but at what cost? That's the challenge with these type of agreements. I many times say the picture is fabulous. Let's put it in a drawer because 25 years from now we'll be doing the same thing.

Michael Bell:The devil's in the details and what it means for—

Peter Cerdá:Yeah. I would think, and Ángela is probably a better expert than me, One thing is that you have ministers of transport signing these, which I think is critical, but unless it becomes a head of state priority, many times it doesn't get to the level it should be. This has to become a head of state regional initiative, in my opinion.

Michael Bell:One of the points that was made here was, okay, why does this have to be so complicated, and why can't you guys as an industry just Educate the consumer about how their fare is constructed, where the money's going, and build the advocacy. It sounds simple, but if it was that simple, I think it would have happened already. So just help me with that. Why is that sort of simplistic, maybe, suggestion so hard to pull off?

Ángela Orozco:Well, I believe the world has changed, and because we are in the social network world, it's completely different from 30 or 40 years ago. So I believe all of us have to learn how to communicate this in the new world, and it's tougher. In general, governance in the world of the social networks is different, and it applies to any industry. So I believe we have to learn to show this and to teach everybody about this, but the challenge is tougher today than it was 40 or 30 years ago.

Peter Cerdá:And Ángela, I think Ángela is right in this. Look, this is an industry which brings extreme passion, To vast majority—

Michael Bell:Everyone has a point of view.

Peter Cerdá:Everyone. The problem that we have within the industry, this is a very attractive industry to poke at because no one will put anything on Instagram or X or Facebook on just a normal flight that left on time, arrived on time, you were served nice service. No one will post a picture. Now, every time there's a delay, we just had the recent unfortunate accident in Miami. Instantly, the amount of coverage and commentary from non-experts on what the causes of the accident, or someone not being treated correctly on an airplane, or a delay— that gets so much more hits than going to Flightradar and taking just a snapshot of the world.

Michael Bell:People like bad news, right? I want to— one of the questions disappeared on the screen, but I'm going to wrap with this one because it relates to what I do. So it was, you know, why should the young talent think to come and join this industry when it's got so much complicated regulation and bureaucracy, etc.? Is that a hindrance in your mind to getting people interested, the next generation of aviators?

Cuitlahuac Gutiérrez:I think that— well, I think this— we have discussed this in Mexico, you know, through the national chamber and and some media journalists says, how to attract these people? The problem is not to attract into the industry, but for them it's sexy.

Ángela Orozco:For everybody, it's very sexy.

Cuitlahuac Gutiérrez:It's sexy.

Michael Bell:Notwithstanding the complexity.

Cuitlahuac Gutiérrez:It's nice. Perhaps, I don't know, especially these new generations where they will see his own in 5 years, but for today, I will be there. I will be very easy to fly. I work in an airline. I think that that happened is that passion or the passion that we used to have.

Michael Bell:Rafael, you were nodding your head. It doesn't seem to be an issue for you guys.

Captain Rafael Bárcenas:No, I don't think so. I think you're born with it. There's enough people in the world to be born with that thing inside that you like airplanes and the industry and you want to become a pilot or you want to become a mechanic or a technician or whatever you need to do in the industry. I don't think we have a problem with that.

Michael Bell:Well, I'll share this. Oh, sorry, Michael.

Michael Gill:Come on, Michael. I was just going to say, Michael, even for a lawyer, You can find passion in the aviation sector, and one of the reasons I have always wanted to work in this area is just— is because of the operational complexity, the range of legal issues, the international nature of it. I think that still applies today, and perhaps we just need to do a better job of explaining what our respective jobs are to the next generation of professionals to show them that, you know, you don't just need to be a pilot or cabin crew. There are a whole range of different topics and areas where you can—

Michael Bell:And increasingly a technology business.

Captain Rafael Bárcenas:Absolutely.

Michael Bell:I'll just wrap with this on that question. You know, we're a huge firm at Korn Ferry. We have many other industry practice groups. I do aviation, but many of my colleagues outside aviation often come to us and say, hey, our client, they want someone out of the airlines. And I go, oh, really?

Captain Rafael Bárcenas:Why?

Michael Bell:And they say, because they know it's a really, really tough and complicated business, and the people in that industry are well trained. Probably there's a good side to the complexity as well. Well, with that, we're at time, so I would ask you to join me in thanking our wonderful panel for their great contributions today.

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