Aerolineas Argentinas’ President, Mariano Recalde, announced plans to put in place a reactivation project which expects to see the airline reach profitability within five years (Clarin, 25-Sep-09). The project will be presented to the Argentine Parliament for approval on 01-Oct-09.
Aerolineas Argentinas expects to reach profitability within 5 years
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Argentina Aviation Part 2: Aerolineas Argentinas pressured as competition intensifies
Argentina’s domestic market is poised for more rapid domestic growth driven by further expansion at Aerolineas Argentinas and intensifying competition. Aerolineas has focused primarily on domestic expansion since its renationalisation in 2008 and continues to grow its domestic fleet.
Argentina’s domestic market grew by approximately 60% from 2011 to 2015, driven entirely from expansion at the Aerolineas Argentinas Group. Competition during this period was limited by the restrictive and protectionist policies of the previous government, enabling Aerolineas to increase its market share without having to fend off expansion from its local rival LATAM Argentina, or potential start-ups.
Under the more liberal policies of Argentina’s new government, LATAM Argentina is now free to expand. New airlines are also able to launch, starting with a regional start-up backed by Avianca parent Synergy and a potential new affiliate of the Latin American LCC group Viva. Aerolineas is responding to the prospect of new competition by pursuing more domestic expansion.
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.