That appears to be a bacterial infection and a large one. Have you seen any other issues like a wound there or signs of ich or flukes? These usually go hand-in-hand. More info on bacterial infections:
Bacterial infections:
Symptoms - Sometimes it's self-describing: Popeye/cloudy eyes, fin & tail rot, dropsy (bloated fish), etc. But some other bacterial infections, such as furunculosis, hemorrhagic septicemia, etc., can have varying visible symptoms. Any redness or open sores/wounds on a fish should be viewed with suspicion. Also, a white film or fungus-looking growth may denote a bacterial infection. It’s important to note that in many cases a bacterial infection is usually secondary in nature to a parasitic infestation such as ich, meaning if a fish has been battling ich for a while then his immune system has been lowered. This makes infection more likely for many opportunistic, harmful bacteria.
Treatment options - Broad spectrum antibiotic medication i.e. one that treats both gram-positive and gram-negative bacterial diseases. Examples of this include Furan-2, Kanamycin aka Seachem Kanaplex, Nitrofuracin Green Powder, Triple Sulfa Powder, or a combination of using both Erythromycin & Minocycline. The latter can be accomplished (albeit expensively) by using freshwater Maracyn 1 & 2 and then doubling the dosage for saltwater use. When battling a particularly nasty bacterial infection, combining Furan-2, Kanaplex and metronidazole (ex. Seachem MetroPlex) can be very effective (and safe). Props to “hedgedrew” for enlightening me of this.