As the global aviation industry accelerates toward net zero, Latin America and the Caribbean (LAC) face a structural paradox. In its recent roadmap, Route to Sustainability in Latin America and the Caribbean, the Latin American and Caribbean Air Transport Association (ALTA) makes clear that while the region supports the global decarbonization agenda, the economic pathway will be uniquely complex.
Aviation in LAC represents roughly 4.8% of cumulative global aviation emissions between 2013 and 2023, according to ALTA’s analysis. Yet the region may confront disproportionately challenging transition costs relative to its economic resilience and connectivity needs.
Unlike Europe or the United States — where air travel penetration exceeds two trips per capita annually — Latin America averages just 0.64 trips per capita. Growth potential remains significant. But that growth is tightly interwoven with development, tourism, trade integration and territorial cohesion.
The question is no longer whether the region supports net zero aviation. It does. The real question is whether it can decarbonize without pricing itself out of connectivity.
Aviation as Economic Infrastructure
ALTA’s report underscores aviation’s systemic importance: the sector supports approximately 8.3 million jobs and contributes around $240 billion to the regional economy. In Latin America and the Caribbean, air transport is not discretionary mobility — it is economic infrastructure.
Geography reinforces this dependency. The Andes fragment territories. The Amazon basin limits terrestrial connectivity. Caribbean archipelagos rely heavily on air links. Rail alternatives remain limited across much of the region. Tourism-dependent economies are particularly sensitive to air access.
Any structural increase in airfares, therefore, carries macroeconomic implications. In emerging markets, demand elasticity tends to be higher than in mature economies. Even moderate price shifts can dampen passenger growth and reduce broader economic spillovers.
The SAF Cost Shock
At the center of ALTA’s roadmap lies Sustainable Aviation Fuel (SAF), widely recognized as the primary decarbonization lever available at scale before 2040. Yet the economic differential is stark.
The report notes SAF price premiums ranging from 40% to as high as 350% compared to conventional jet fuel, depending on production pathway and market dynamics. With reference jet fuel prices averaging around $890 per metric ton over the past 12 months, the cost gap remains material.
Beyond production costs, infrastructure gaps remain significant. Blending facilities, storage capacity, distribution logistics and certification frameworks are unevenly developed across the region. Economies of scale are still limited, and capital expenditure requirements are substantial. This creates a strategic tension.
If airlines absorb SAF premiums, margins — already thin across much of Latin America — compress further. If costs are transferred to passengers, demand suppression becomes a risk. If governments impose blending mandates without coordinated financial mechanisms, marginal routes could become economically fragile.
In such a scenario, sustainability policy could inadvertently accelerate network concentration around major hubs, while peripheral routes decline — a particularly sensitive outcome for smaller Caribbean states.
Efficiency Gains Already Delivered
Importantly, the region has already achieved measurable efficiency improvements. ALTA highlights that fuel consumption per 100 revenue passenger kilometers declined by approximately 28% between 2011 and 2023. Fleet renewal has been significant, with newer-generation aircraft delivering 15–20% fuel efficiency improvements per generational step.
Much of the operational “low-hanging fruit” has therefore been captured.
The next phase of decarbonization will require structural transformation in energy sourcing rather than incremental operational gains.
Equity, Policy Design and Differentiated Pathways
ALTA’s roadmap also implicitly raises questions of regulatory symmetry.
Only two regional economies — Brazil and Mexico — rank among the top global aviation emitters cumulatively over the past decade. The broader region’s historical contribution remains comparatively modest.
This context complicates the policy debate. Should Latin America replicate regulatory architectures designed for mature markets with higher per-capita mobility and deeper fiscal capacity? Or should differentiated pathways be considered?
Potential approaches include:
- Incentive-based SAF deployment in early stages rather than rigid mandates
- Blended finance structures supported by multilateral development banks
- Industrial strategies to localize SAF production where feedstock advantages exist
- Transitional safeguards for essential connectivity routes
The sequencing of policy instruments will determine whether sustainability becomes a competitive industrial opportunity — or a structural burden.
The $300 Billion Question
ALTA estimates that, assuming roughly 6% of global aviation traffic share, proportional transition costs for Latin America and the Caribbean could range between $240 and $318 billion between 2020 and 2050. The magnitude reframes the debate.
Who finances the transition?
Airlines cannot absorb such costs alone without compromising resilience. Passengers in price-sensitive markets may resist sustained fare increases. Governments face fiscal constraints. Development finance institutions, energy investors and innovative public-private partnerships may therefore play decisive roles.
The financing architecture will determine whether the transition is expansionary — catalyzing regional biofuel industries — or contractionary, dampening connectivity and growth.
Competitive Rebalancing Ahead
The sustainability transition may also reshape regional competitiveness. Countries with feedstock advantages and industrial ecosystems — notably Brazil, Colombia and Chile — could emerge as SAF production leaders. Hubs capable of integrating fuel supply chains efficiently may gain structural advantage. Others, dependent on imported SAF, could face asymmetrical cost exposure.
In this sense, decarbonization is not merely environmental policy. It is industrial strategy and geopolitical positioning.
Avoiding a Connectivity Penalty
ALTA’s roadmap does not question the necessity of decarbonization. Rather, it emphasizes the need for calibrated implementation aligned with regional realities.
Latin America and the Caribbean can decarbonize aviation. The region has already demonstrated efficiency progress and modernization momentum. The strategic challenge is ensuring that net zero does not translate into net disconnection.
The coming decade will determine more than emission trajectories. It will define whether sustainability strengthens — or constrains — the connectivity architecture upon which the region’s development depends.
