Boliviana de Aviacion set to expand as re-launch of Aerosur is unlikely due to government roadblocks

Bolivia's Government has reportedly rejected a bailout plan for beleaguered Aerosur, which ceased operations in May-2012 after buckling under mounting tax burdens. The latest move adds fuel to arguments repeatedly made by Aerosur's private owners of the Bolivian Government showing a bias towards state-owned Boliviana de Aviacion (BoA) since BoA launched operations in 2009. BoA immediately drove down domestic fares in Bolivia and quickly captured a domestic market share equal to Aerosur.

BoA also launched international operations in 2010 and is now poised to accelerate expansion of its international network, which currently consists of only two destinations. Aerosur was Bolivia's largest international carrier and its demise creates opportunities for BoA, the country's small regional carriers and the 10 foreign carriers that currently serve the Bolivian market. New foreign carriers are also likely to launch services to Bolivia, with Spain's Air Europa particularly eager to join BoA in filling the void left by Aerosur on the key Madrid route.