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Aviation Industry Protests against Jet Fuel Tax in Mexico Prompt Exemption of Fiscal Measure

Written by thomas · Filed Under Commercial 

January 15, 2014

thomas

Miami (January 14, 2014) – In response to the overwhelming objections by ALTA and other local and regional air transport associations, as well as Mexican airlines, the Mexican government has decided to exempt the fuel consumed by airlines for transporting passengers and/or cargo, from the Special Tax on Production and Services (IEPS by its Spanish acronym).
The fiscal reform law, approved by the Mexican Senate in late October, would have heavily affected the cost of jet fuel in Mexico, with an estimated impact of MEX$480 million annually, further reducing Mexican airlines´ competitiveness.
Eduardo Iglesias, Executive Director of ALTA, commented on the exemption announced by the Mexican government on December 26th, “ALTA approves of the measure to exempt from taxes the jet fuel used by Mexican carriers. It is a positive sign that the Mexican government recognizes and appreciates the importance of the air travel industry in relation to the economic development of the country. It is our view that governments must take measures to support the industry allowing airlines to remain competitive for the benefit of local economies.”
Fuel is the highest and most important operational cost component for an airline, representing an average of 34% of a carrier´s expenses. Any additional taxation to fuel is estimated to increase air ticket prices, possibly reduce routes and be in general detrimental to the air transport industry and consumers.

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