Business Economy Tourism

Colombia Reverts Airline Tax Changes to Pre-Covid Levels

During the Covid 19 pandemic, travel restrictions were placed on many, if not most, countries worldwide. As an obvious consequence, industries that depend on people’s travels for their welfare were hardest hit. The airline industry was particularly hard hit, as they managed with notoriously slim profit margins even during regular times.

One of the measures many countries took to help mitigate the impact of the lockdowns on the airline industries was to reduce the amount of Value Added Tax (VAT) they were required to pay to the government on the tickets they sold. These airlines had been forced to mainly survive on cargo flights and short local travel to keep their books balanced.

The General Tourism

In pre-pandemic times, airlines were required to pay 19 percent of the money they charged for each ticket to the government. As part of their efforts to support the industry, the Colombian government decided to reduce this tax to 5 percent. The hope was that this cost-saving measure would shield them from excessive economic damage.

This law stipulated that the reduction in VAT would last until the end of the year 2022, meaning that from January 1, 2023, the VAT would return to its pre-Covid levels of 19 percent. Even so, a proposed bill working its way through the houses of the legislature will make it a sanctionable offense not to comply with the tax resumption. Effectively, this will mean that airlines that overcharge for their tickets will face legal ramifications.

Keeping Travelers Safe

In addition, the House of Representatives also includes a stipulation in the bill stating that any airline that delays potential passengers waiting for a flight for more than an hour but less than three must take it upon themselves to provide the delayed groups with sufficient food.

If the delay happens to last more than three hours but no more than five, then the airline will be compelled to provide vouchers to the waiting customers providing them with redeemable goods or services valued at least 20 percent of their ticket’s value. In the worst-case scenario where a flight is canceled altogether, the new regulations will stipulate that airlines provide their disappointed travelers with alternative travel options by offering rescheduled flights.

The bill has currently gone through two of the four debates required to have it passed into law. The only opportunity for relief that an airline in such circumstances might have is if the circumstances causing the delays are out of the hands of the airline’s control. This might include acts of God such as hurricanes, earthquakes, and so on.

It’s important to note that the overriding objective of these regulations is not to punish airlines but to ensure that the airline industry gets back to normal operations in a way that doesn’t take advantage of travelers. Most airlines managed to navigate the pandemic years successfully due to the leeway granted them by governing authorities. So these laws are designed to make the transition back to normal. Let’s hope they achieve their objectives.

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