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Aerospace Resource Guide: Colombia

 

Colombia Statistics

Summary
Market Entry

Current Market Trends

Current Demand

Main Competitors

Best Prospects
Barriers

Trade Events/Associations

CS Contact

Capital: Bogotá
Population:
46 million
GDP:
USD 380.5 billion
Currency:
Peso
Language:
Spanish

Summary

The aerospace industry has had significant growth in Colombia in the last decade for two main reasons. The government invested heavily in military equipment which proved to be effective during the recent internal conflict. Also, as a result of political stability, significant economic development has begun in the civil aviation industry, with strong growth close to 11% in 2013. The Colombian government has increased investment in aeronautical infrastructure due to the increasing demand on airport traffic from passengers and cargo both domestically and internationally. This is a market with very good prospects for U.S. companies, with projected growth over the next five years. In terms of passengers transported, Colombia grew four times faster than the global growth rate, and three times more when compared to Latin American growth.

Market Entry


Distribution
A reliable distributor or representative is crucial to entering the Colombian market. Colombian law does not require foreign firms to secure local representation for private sector sales. However, Colombians prefer to deal with companies that have a local representative to ensure access to after-sales services. The one exception to this law is for sales to the government, which does require foreign bidders to have legal representation in Colombia.

Regulation
Colombia´s Civil Aviation Agency (AEROCIVIL) is the government entity responsible for the regulation and control of the aeronautic and airport infrastructure. Recently, the Colombian Agency of Infrastructure (ANI) was appointed to administrate the concession process of the modernization of four airports.
Given the tremendous opportunities for U.S. exporters in Colombia, it is appropriate that on October 21, 2011, President Obama signed the United States-Colombia bilateral trade agreement (U.S.-CTPA) following its approval by the U.S. Congress. On May 15, 2012 the FTA agreement entered into effect.

Current Market Trends


The aviation industry in Colombia is growing at a rate greater than 10% per year and it is expected to continue as such in the future. This high growth trend is introducing a new dynamic to sub-sectors such as aircraft parts, MRO services, avionics, aeronautical infrastructure equipment and others. The Colombian government (GOC) is updating its airport infrastructure with concessions packages through ANI. The GOC is also working to update current airport infrastructure by passing a Public Private Partnership (PPP) law that allows international companies to invest through build-operate-transfer concessions that will expand infrastructure investment to levels not seen in Colombia since the 1950s. Bogotá recently inaugurated its new Airport (New El Dorado), now ranking third in passenger movement and first in cargo (in Latin America). Medium size cities such Cali, Medellin, Cartagena and Barranquilla are in the process of updating their terminals through concessions. Smaller cities such as Neiva, Armenia and Popayan are in the process to enter concessions for renovations.

Current Demand


The aviation industry in Colombia is growing at a rate greater than 10% per year. In 2009, the country was handling 15.6 million passengers, while in 2013 it reached 28 million. The projections are that Colombia will grow to around 35 million passengers by 2016. Seventy percent of cargo and passenger operations occur at El Dorado Airport in Bogotá, which is the second busiest airport in South America overall and the busiest airport for cargo shipments. El Dorado airport is growing rapidly, moving 1 million tons per year. In 2012, the airport reached close to 700,000 tons in cargo.

Competitors


All major aviation industry companies have their products in Colombia. Competition is tough and demand is continuing to grow. Companies that belong to subsectors such as aircraft parts, MRO services, avionic parts and services, and military equipment are competing for a market share in Colombia. Price and quality of service play a major role in the market.

Colombia signed an open skies agreement with the United States that entered into effect in January 2013 which will increase competition for the market. Markets still waiting to be developed are private helicopter and small general aviation.

Best Prospects


Colombia’s small Low Cost Airline penetration rate should lead to opportunities for rapid growth in both the domestic and international markets. The country’s expanding middle class has a need for low fares that VivaColombia and low cost U.S. Airlines are starting to exploit.

The dynamic market has paved the way for opportunities in other sub sectors such as aircraft parts, MRO services, avionics, aeronautical infrastructure equipment and others.


Barriers


The Colombian government continues to struggle in its management of concessions. This poses a real risk to subcontractors in terms of delays and predictability. For years, the government exclusively managed Colombia’s airports. The government built and developed infrastructure for the needs of a closed economy. In the mid-1990s Colombia began a slow process of opening its economy to the rest of the world, causing greater demand on the obsolete airport infrastructure. The Colombian economy is expected to continue growing in the coming years (4.5% in 2014), creating more demand on airport infrastructure as a result of an increase in passenger and cargo traffic. One challenge will be aeronautical infrastructure, managed by AEROCIVIL, matching the same level of technological sophistication as the investments made in the physical infrastructure of the airports. AEROCIVIL is planning to upgrade the current navigation system to the new CNS/ATM which stands for Communications, Navigation and Surveillance Systems for Air Traffic Management. The system uses digital technologies, including satellite systems, and varying levels of automation to achieve a seamless global Air Traffic Management system. This is an ambitious program with the latest Airport technology that will ensure safer aircraft traffic control.

Trade Events/Associations

Expodefensa

October 29-31, 2014 | Bogota, Colombia
http://www.expodefensa.com.co/

The only defense and security oriented show in the country. Organized by the Ministry of Defense, High Technology Corportation, and Corferias.

Feria Aeronáutica Internacional

Medellin (Rionegro), Colombia
http://www.f-aircolombia.com.co/

The most important Air Show in Colombia. Organized by the Colombian Air Force. Includes military and civil aircraft.

U.S. Commercial Service Contact Information:


Mr. Camilo Gonzalez
Commercial Specialist
Camilo.Gonzalez@trade.gov
+57 (1) 275 2764


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