Argentina: Aerolineas Argentinas faces a tough turnaround with government's new liberal mindset

A new liberalised mindset emerging in Argentina has drawn the attention of Latin American airline groups looking to capitalise on new opportunities in the country's historically closed-off domestic aviation market. Avianca's major shareholder Synergy Group is aiming to launch a new domestic airline in Argentina, and the Viva Group is also eying establishing a new airline in the country after abandoning plans to launch its third low cost carrier in Costa Rica.

At the same time, Argentina's state-owned flag carrier Aerolineas Argentinas is attempting to transition to a more commercially minded airline after years of bleeding cash and being propped by the former Argentinian government. The airline is aiming to become solvent by 2018, but formidable challenges lie ahead for Aerolineas in reaching that goal, evidenced by the airline's pilots recently resorting to a familiar tactic - staging a strike.

Argentina's pledge for a more liberalised aviation market is a welcome change, but obstacles loom large for the country's largest airline and prospective start-ups as the government still regulates domestic fares, and infrastructure costs remain high. Still, a move toward liberalisation in one of Latin America's most closed-off markets could be one of the most important developments in the region's aviation industry in the medium to long term.