Economy Minister announces new reduction in boarding taxes as of July

Economy, Development and Tourism Minister José Ramón Valente and the National Productivity and Entrepreneurship Office Director, Andrés Osorio, have announced a new reduction in boarding taxes for domestic and international flights as of July. The objective is to continue to reduce the prices of airline tickets and encourage greater competition in the market.

Thanks to the new reduction, boarding taxes for domestic flights will drop an additional 10%, while international rates will fall by 3.8%.

This reduction is in addition to the one announced by Minister Valente last August, which went into effect in October and included a reduction of 20% in the rates for domestic flights and 13% for international flights.

“We are making progress in democratizing the skies of Chile, with a measure that will directly benefit more than 24 million air passengers in our country, generating more competition so that prices go down even further," said Minister Valente. He added that that "as a government we lowered these boarding taxes to make flights more accessible. We reduced prices by 20% and the number of passengers flying through our skies has increased very significantly."

The Minister continued, "with this reduction we want Chileans to travel more and at a lower cost over the winter and Independence Day holidays, so that there will be an increase in the 24 million passengers who traveled by air last year."

Between October 2018 (the month in which the tax reduction was implemented) and February 2019, air transport prices fell by a cumulative rate of 20%, according to data issued by the National Statistical Institute.

Moreover, between November 2018 and January 2019, the number of passengers taking domestic flights increased by 19% year-on-year, according to data from the Civil Aviation Board.

The measure forms part of a plan promoted by the Economy Ministry to reduce national boarding taxes by 40% by 2020.

Current boarding tax rates

With respect to the tax rates presented below, a 10% discount will be applied in the case of domestic and international rates for routes of less than 500 kilometers, while international rates for routes over 500 kilometers will be reduced by 3.8%.

Boarding taxes are readjusted quarterly in accordance with the Consumer Price Index by the Directorate General of Civil Aviation, and the next readjustment will be applied at the beginning of April.

Introduction of ‘Level’

Minister Valente's announcement was made during the introduction of a new long-range, low-cost airline called ‘Level’, which is the first company that will operate routes under this format to Europe, with two trips per week between Santiago, Chile and Barcelona, Spain, during the initial stage.

"That Level has opted for our country underlines how highly competitive our market is, and that our borders are opening up even more and that the most important airline companies in the world are adopting a different view of Chile," said the Minister.

Minister Valente also emphasized the importance of working on policies that benefit citizens: “The fact that we are making a commitment to these reductions in taxes is simply to reinforce the idea that, in a market that is already seeing a lot of competition with the arrival of new airlines such as Level, what we are doing is continuing to improve the quality of life of the people of Chile."

Meanwhile, Level CEO Vincent Hodder stressed that the announcement of the reduction in boarding taxes is an example of why they chose Chile to expand their operations. “Thanks to the Chilean government for this fantastic news," he said.