As the world becomes ever more connected and globalized, transportation of people and products increases in complexity and importance. Colombia, one of Latin America’s fastest growing economies, is a natural hub and crossover point for airline carrier services and companies. With nearly US$3.9 million just in exports in the month of April alone, the country is ripe for airline carrier companies. Foreign and national businesses importing and exporting products continue to search the market for the most ideal aviation partners. This makes creating airline carrier in Colombia an attractive business.
While the market is rich and lucrative, there are some requirements for entry to be aware of. We give an overview of the different authoritative agencies and steps involved in registering an airline carrier company in Colombia.
1. Register an Airline Carrier in Colombia – A Foreign Branch
Before getting started with the details of Colombian regulations and air traffic rules, first steps are to register a foreign branch. To do this, Colombia requires a certificate of incorporation and legal representation from the original country of incorporation. Additionally, the government asks for a copy of the company’s bylaws and an approved Power of Attorney to act on the company’s behalf. Finally, a comprehensive document with the company headquarters’ address, monetary amount allocated to the new branch, and the business industry of the company.
Next, after gathering these documents and filing with the Colombian government, a formalized public document is created and signed by a representative of the company. Once signed, the company creates a unique tax registry with the country’s tax office, so as to obtain a unique taxpayer identification number (NIT) for the branch. Once a NIT is secured, a representative must file the company ledgers and books with Colombia’s Chamber of Commerce.
The final steps involve opening a bank account in Colombia. Generally, new branches can bank with whichever company they choose. However, for airline carriers, there are specific guidelines for banking. These regulations are created by International Air Transport Association (IATA) and regulated by the Cargo Accounts Settlement Systems (CASS). A more detailed description of the guidelines follows.
2. Register with IATA – Aviation Law
Before starting operations in Colombia, any airline company must first register with the IATA. IATA is the organization which manages and regulates all air traffic and the companies around the world. Currently, it works with and manages 290 different member airline carriers worldwide.
Before registering with IATA, the branch must first register and accept the terms of the IATA Operational Safety Audit (IOSA). This international organization provides standardized means for monitoring and evaluating airlines’ operational and control systems. Moreover, membership to the organization provides a variety of benefits like fewer auditing processes and IATA quality assurance.
Once the branch is approved through IOSA, it can then proceed with its IATA membership application. When approved, there are some costs associated with maintaining a IATA membership. Fixed fees sum up to over US$13,000. Additionally, annual variable fees can add to the total membership cost.
3. Understanding Cargo Accounts Settlement Systems (CASS)
The Cargo Accounts Settlement Systems – CASS is an offshoot of IATA. This organization works specifically with the financial matters related to member airlines. Aside from the initial fee of US$2,500, there is no extra cost to associate with CASS, as it is included in the IATA membership. There are a host of benefits and advantages companies recognize by using the system:
- Streamlined invoicing and sales revenue processing
- Neutral settlement office
- Flexibility of data management through specialized online software
- Financial control and improved cash flows.
With an IATA membership and an already implemented CASS system, branches opening in Colombia must contact CASS to get clearance to operate in the country. This is done by having a bank account in the country or by having a foreign bank account in the country’s respective currency. Should the company choose to work with a local bank, the only Colombian branch partnered with IATA is Colpatria. No other Colombian banks comply with the requirements and regulations of IATA and CASS.
4. Apply for your operations licenses as an airline in Colombia
Aerocivil is the national organization in Colombia that oversees aviation guidelines. As a branch of the Ministry of Transportation, Aerocivil controls, regulates, and monitors all air traffic and regulations related to airlines that fly through or to Colombia.
The organization outlines a series of objectives to improve the functionality of air traffic in Colombia. Aerocivil grants licenses and permits for the following:
- Licenses to Aeronautical Personnel
- Certification of Aeronautical Products
- Aeromedical Certification
- Certification of Air Transport Organizations
- Airworthiness Certification
- Aerodrome Certification
- Certification of Aeronautical Training Centers
- Workshop Certification
- Simulator Qualification
Technical requirements for your operations are available online in Spanish. As a foreign branch, a detailed plan of decided routes, frequency, overflies, intended operation zone, show registration and insurances for aircraft(s) must be turned in to Aerocivil. After reviewing the document, Aerocivil should approve the branch and its operations.
5. Airworthiness approval
Obtaining an airworthiness certificate is one of the essential steps in getting operational approval fir an airline carrier in Colombia. There are a series of processes a company must go through when applying for the certificate. First, the company goes through the ‘pre-order’ phase. In this time, Aerocivil recommends the company contact them and notify them of their future application so that the organization knows to look out for it. Moreover, it gives the company a chance to familiarize itself with the standards and requirements for the application process.
Following this stage is the ‘planning stage.’ In this process, Aerocivil appoints a representative and a whole team to help generate a personalized plan for the applicant. First, the team analyzes the design and functionality of the aircrafts, making sure they comply with safety regulations. Approval in this realm grants the company the ‘Basis of Certification’ for airworthiness. This certificate creates the standards upon which the airworthiness certificate is constructed.
Next, the company goes through the ‘Determination of Compliance with Standards’ phase. Here, Aerocivil reviews the substantiation reports presented by the company, completes inspections, and tests the equipment. Should the company meet the standards and guidelines outlined by Aerocivil, it can then move on to the next phase
Finally, the company enters the ‘Post Certification’ phase. After obtaining the airworthiness certificate, the company must keep up with data management, complying with regulations, and submit updated flight records and paths. Keeping up with these steps is crucial to stay in good graces with Aerocivil and have continuing success in airline operations.
Doing Business – Connect Colombia with the rest of the world
As of 2017, Colombia was the 55th largest exporting nation in the world. While the country has seen rapid economic improvement and increase in investments, there is still a great amount of potential. Through increased trade routes, layover stops, and more tourist traffic, Colombia could be one of Latin America’s most powerful economies in the near future.
Already, the country exports heaps of crude oil, coffee, and gold. Increasing globalization and connectivity within Colombia can only improve these trade figures. As foreigners recognize the importance and potential within Colombia, this will happen naturally. Since the early 2000s, foreign investment and businesses increased drastically, bringing wealth and jobs to Colombia. As a result, poverty rates decreased drastically and the average annual GDP growth rate increased.
Navigating your future and setting-up your business in Colombia
Connecting Colombia with the rest of the world not only benefits the country itself, but also the people that help in the process. Foreign investors and established airline carriers can benefit greatly from expanding their operations to Colombia. With expansion though comes tedious and complex registrations and legal processes.
The legal, accounting and back office experts at Biz Latin Hub can help you navigate these complicated regulations and get your business up and running. Our team provides specialized strategies and plans to assist you in a variety of back-office services and commercial representation needs. Reach out to our team today to get started.