PERU: New Cusco airport will help boost tourism

Abstract

Implications of a new airport in Cusco, which the government recently approved.

This will greatly improve accessibility to southern Peru, one of the areas of greatest tourist interest in Latin America. The tourist industry, which poor infrastructure undermined in the past, is fast expanding.

SUBJECT:Implications of a new airport in Cusco, which the government recently approved.

SIGNIFICANCE:This will greatly improve accessibility to southern Peru, one of the areas of greatest tourist interest in Latin America. The tourist industry, which poor infrastructure undermined in the past, is fast expanding.

ANALYSIS: The government agency responsible for development projects, Proinversion, on July 16 approved a plan to hand over design, construction, operation and maintenance of Chincheros international airport near Cusco to an international bid. Proinversion, in association with a Spanish group, Advanced Logistics Group (ALG), have developed the specifications for the airport.

Cusco fillip. The scheme to build an airport capable of taking larger planes from international destinations has been on the wish list for the authorities in Cusco for the last 20 years. The present airport is in a steep valley just outside the city of Cusco, has a short runway and can cater only for small jets. Flights have been restricted mainly to national air links, principally with Lima and Arequipa, though there have been intermittent links with La Paz in Bolivia.

Cusco is among Peru's key tourist destinations, and the establishment of direct air links with the United States and Latin American countries will provide a vital boost to the local economy. News of the development of the new airport will also be a vote-winner for the ruling APRA party. Peru has local and municipal elections this October and presidential and congressional polls next April.

There will be concern in Lima that the new airport in Cusco may divert away tourism from the capital. While it is the hub of the country and an historic centre in its own right, the fabric of the capital is not such as to make it an attractive destination. Similarly, there will be concern in the north of the country that Cusco and the south will reinforce their already leading position in the tourist market.

Tourism appeal. Peru has enormous appeal for international tourism (see PERU: Tourist sector growing but needs promotion - December 13, 2004):

Historical heritage. The country saw a succession of pre-Hispanic cultures that culminated in the Incas in the 15th century. Cusco was the capital of the Inca empire, and the area includes the most renowned pre-Hispanic sites, including world-famous Machu Picchu. Peru then was the centre of Spanish colonial rule until the early 19th century, with Lima its vice-regal capital.

Varied geography. The Andes chain divides the country into three distinct regions: the coastal plain, the highlands and Amazonian jungle. Peru has some of Latin America's highest mountains, which provide opportunities for hiking and mountaineering. It is reputed to have one of the world's greatest variations of biodiversity. There are many opportunities for 'adventure tourism', as well as 'eco-tourism' (see EUROPE: Tourism goes green - August 6, 2010)in the Amazon.

Culinary reputation. Peru's culinary reputation has developed rapidly in the last two decades. Lima and other cities have top restaurants.

Negative factors. However, a number of factors frustrated the country's tourist potential:

Poor infrastructure. Investment in the necessary tourism infrastructure has been lacking:

Terrestrial transport in Peru is slow, hazardous and (in the highlands) subject to interruption. The main rail link between Cusco and Machu Picchu was closed for several months earlier this year because of landslides.

Air links also are deficient, though privatisation has brought new carriers which have improved quality of service in recent years.

Hotels, particularly outside Lima, often have poor facilities, though quality has improved in recent years, particularly in the area around Cusco.

Criminality and insecurity. Tourists are frequently victims of petty crime. This affects terrestrial transport hubs in particular. Those most affected tend to be 'backpackers' who use these routes more than other types of tourist. There have been cases of tourists being kidnapped for ransom. Police provide little protection to tourists outside main attractions.

Reputation for violence. Political violence during the 1980s and 1990s had the effect of deterring tourists from visiting Peru. This did lasting damage to Peru's reputation. It also had the effect of deterring visitors from areas such as Ayacucho, once the heart of the Sendero Luminoso (SL) guerrilla insurgency (see PERU: SL attacks prompt counter-insurgency debate - October 1, 2009). Some 70,000 people were killed in the war against SL between 1980 and 2000.

Increased numbers. The impact of these disadvantages has ebbed in recent years, and successive governments have taken steps to encourage tourism. As a consequence, the number of foreign tourist arrivals has increased substantially:

The number of foreign tourist arrivals registered at Lima's Jorge Chavez airport doubled between 2002 and 2009 to over 1.2 million a year. Numbers arriving in 2008 were 14.4% up on the previous year, and in 2009 they increased 3.6% on 2008.

The estimated income from tourism rose from 837 million dollars in 2002 to 2.47 billion in 2009. In the first quarter of 2010, tourist earnings reached a record 666 million dollars.

The most visited destinations include Cusco, Arequipa and Puno in the south. For instance, in 2009 (before the rail link was severed), over 800,000 people -- Peruvians and foreign nationals -- visited Machu Picchu. Tourism officials also have had considerable success in attracting visitors to other parts of the country, for instance the north and the Amazon region.

Target market. The tourist industry long has been bifurcated:

High-income tourists. High-income tourists usually travel to the country on pre-arranged tours. Much of their consumption is in hotels, restaurants and on internal travel. However, the multiplier effects of this sort of tourism are scant. Travel operators of one sort or another appropriate much of the income.

'Backpacker' tourists. Peru attracts large numbers of 'backpacker' tourists, mostly students, who spend relatively little. Their contribution to the local economy also is fairly marginal.

As it develops its tourist industry, Peru will need to attract larger numbers of travellers who spend more on consumption. There are signs that this is happening, and improvements in infrastructure and Peru's reputation abroad as a 'safe' destination should enhance efforts.

CONCLUSION: Tourism numbers are expected to increase substantially over the next few years. Improved facilities make Peru a more attractive destination. The challenge for the authorities is to attract more tourists with higher spending power.