Uruguay , Argentina , Mexico , Puerto Rico and Colombia
Analysis

Economic slowdown, inflation the main threats to recovery in LatAm air traffic

Bnamericas Published: Wednesday, October 12, 2022
Economic slowdown, inflation the main threats to recovery in LatAm air traffic

Long-term inflation and slowing economic growth deceleration are the main obstacles to the full recovery of air traffic across Latin America, following the lifting of most restrictions introduced during the COVID-19 pandemic, according to a Moody’s analyst. 

“Aside from inflationary pressures, the economic slowdown could affect air traffic, mainly business trips in regions with high passenger traffic in this segment,” Diego González, assistant VP for project finance & infrastructure at Moody’s Investors Service, told BNamericas. 

Moody’s latest report on airports for Latin America and the Caribbean estimates that air traffic will return to pre-pandemic levels next year, with the exceptions of Uruguay and Argentina, which only lifted most travel restrictions in November 2021.

González adds that these countries’ airports cater more to passengers within Latin America rather than travelers from other regions and are therefore unlikely to catch up with 2019 figures until 2024. 

“Moderate demographic and economic growth in the region limits the speed of [air passenger] traffic recovery  [in Uruguay and Argentina] compared with other airports in Latin America,” he says.

On the other hand, surging jet fuel prices are likely to translate into higher ticket prices for fliers, which will also be a challenge for the recovery, according to the report. 

As of the first half of 2022, only three operators rated by Moody’s, Mexico’s GAP, Puerto Rico’s Aerostar and Colombia’s Opain, saw higher passenger traffic than in the same period of 2019, as they receive more passengers from Europe and the US for leisure travel. 

By contrast, passenger traffic at Montevideo’s Carrasco airport only reached 58% of pre-pandemic levels in 1H22. 

In general terms, Moody’s outlook for airport operators is stable across the region, which will be reflected in strengthened financial metrics, according to González.

However, infrastructure expansions in the sector will not be a priority in the medium term, as most operators have already completed the upgrades required in their contracts, with the exception of Argentina’s AA2000, which is currently building a new US$26mn terminal at Buenos Aires’ main airport, Ezeiza.

“As the gradual recovery of traffic to pre-pandemic levels continues, airport capex needs and requirements will be updated,” González said. 

Subscribe to the most trusted business intelligence platform in Latin America. Let us show you our solutions for Suppliers, Contractors, Operators, Government, Legal, Financial and Insurance.

Subscribe to Latin America’s most trusted business intelligence platform.

Other projects

Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.

  • Project: Los Ricos
  • Current stage: Blurred
  • Updated: 4 days ago

Other companies

Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.

  • Company: Empresa Construtora Brasil S.A.  (ECB)
  • Empresa Construtora Brasil S.A. (ECB) works on engineering and construction of projects on road, railway, urban, industrial, port and airport, civil and mining infrastructure, n...
  • Company: Mercantil Commodity S.A.C.
  • Mercantil Commodity S.A.C./Mercantil S.A. has 35 years of experience in distribution of sodium cyanide in Peru and Latin America. The company was the first in Peru to work under...
  • Company: Ingersoll Rand, Inc.  (Ingersoll Rand)
  • Ingersoll Rand is a diversified global company that manufactures flow control products. Through different brands, the company offers air compressors, oil-free compressors, oil-i...
  • Company: United Telecommunication Services N.V.  (UTS)
  • United Telecommunication Services N.V. (UTS) is a parent company founded in 1999 which operates telecommunication firms in the Caribbean; offering mobile services which include ...
  • Company: Clariant AG  (Clariant)
  • Clariant AG is a Swiss-based specialty chemical company focused on energy efficiency, renewable raw materials, emission-free mobility and conserving finite resources. Its four b...
  • Company: Liberty Insurance Underwriters, Inc.  (LIU)
  • Liberty International Underwriters (LIU) is an American insurance company that provides products, adapted for each client, including casualties, specialty casualties, crisis man...