Aerolíneas Argentinas S.A.
Originally founded in 1950, Aerolineas Argentinas is the national flag-carrier of Argentina and is the parent company of regional airline, Austral Lineas Aereas. Aerolineas Argentinas and Austral operate an extensive domestic and regional network as well as international services. The group also operate Aerolíneas Argentinas Cargo and Jet Paq (cargo services), Aerohandling (aircraft support services) and Optar (travel agency).
Headquartered in Buenos Aires, Parent company Aerolineas Argentinas is majority owned by the Argentine government while all subsidiaries are wholly owned by Aerolineas Argentinas. Subsidiary airlines include:
- Austral Lineas Aereas (since 2008)
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Azul believes Brazil-Buenos Aires service is unviable, partially driven by fifth freedom competition
As the major US airlines sought improved access to Latin America in the 1990s, Brazil and Argentina were persuaded - with some reluctance - to agree to open skies bilateral conditions. One consequence of this liberal environment has indirectly been to open up fifth freedom access between the two countries.
Brazil’s third largest airline Azul concludes now that it cannot profitably serve Buenos Aires, due in part at least to the participation of third country airlines. Buenos Aires is a market in high demand among its customers, but the abundant capacity, including from airlines operating fifth freedom services through Brazil to Argentina, puts this out of the question.
With Buenos Aires unviable for Azul in the short to medium term, it looks as if the airline will focus on more international expansion to the US until its Airbus A350s begin arriving in 2017.
Azul is also keen to strengthen its existing partnership with United and initiate a tie-up with JetBlue, which has a strong presence in Azul’s US markets. Those aspirations likely exclude any consideration by Azul of examining a potential partnership with Gulf airlines.
Air New Zealand is boldly moving forward with its longstanding aspiration to serve Latin America by announcing plans to launch service to Buenos Aires in 2015. The new Auckland-Buenos Aires route is made possible by a new partnership with Aerolineas Argentinas, which will provide connections within South America and local sales support.
For Air NZ, Buenos Aires fills the last major white spot in its network following the upcoming resumption of services to Singapore. Argentina has proven to be a challenging market for foreign carriers but for Air NZ it represents the best South American option with a risk level that is acceptable with the right partnerships.
For Aerolineas, codesharing with Air NZ provides an opportunity to add New Zealand and Australia back to its network. Aerolineas pulled out of the Southwest Pacific market in Apr-2014, leaving a void which Air NZ is eager to fill as it has the aircraft type and connections to succeed where Aerolineas failed.
Brazil’s Gol is continuing to expand into international markets as demand in the country’s domestic market remains tenuous, driven by uncertain economic conditions.
GOL Linhas Aéreas Inteligentes (Gols') international diversification began a little over a year ago as it opted to return to the US market through stop-over flights in Santo Domingo, and the airline continues evaluations of establishing an official hub at the airport. In the meantime Gol is adding new flights from rival Azul’s base at Campinas Viracopos to Miami in Jul-2014. Gol is expanding its one-stop offerings to the US ahead of ambitious plans by Azul to introduce new service to the US in 2015 with Airbus widebodies.
International expansion and other measures Gol has taken to improve its financial performance resulted in some progress during 1Q2014, but the airline still posted an overall loss, driven by currency fluctuations and financing expense.
Brazil’s Gol plans to begin codesharing with Aerolineas Argentinas in Mar-2014, finally moving to the implementation phase of a partnership which was initially forged in late 2011. The partnership will significantly improve the two carriers’ position between Argentina and Brazil, a large market now controlled by LAN and TAM parent LATAM.
For Gol, Aerolineas will become the low-cost carrier’s second two-way codeshare partner after Delta Air Lines. Gol has been carrying the code of several carriers for several years but until recently lacked the technology to sell on other airlines. It is now discussing potential two-way partnerships with several carriers, including TAP Portugal, as part of its new international strategy while looking at expanding its own network including to Africa.
For Aerolineas, the partnership is the carrier’s first in South America and results in significantly improved access to Latin America’s largest market. It supplements several codeshares Aerolineas has been working towards since joining SkyTeam in 2012.
BQB Líneas Aéreas has accelerated expansion, positioning it as Uruguay’s new flag carrier 18 months after the demise of Pluna.
BQB began pursuing expansion in late 2013 with four new routes, its first jet (a wet-leased A320) and a fourth ATR 72 turboprop. The carrier is planning further expansion in 2014, including the acquisition of a fifth ATR 72 and up to three A319s while the wet-leased A320 will be returned.
BQB should be large enough by the end of 2014 to render the proposed re-launch of Pluna or the establishment of another new Uruguayan carrier unnecessary. Uruguay is a small market and BQB is already about one third the size of Pluna, which had operated a fleet of 13 CRJ900s.
Aerolineas Argentinas is focusing on further expansion in the short-haul market, where it continues to benefit from protectionism. The government-owned carrier has committed to purchasing 20 additional 737-800s, growing a narrowbody fleet which has already been renewed since renationalisation in 2008.
The flag carrier has incurred stiff losses since renationalisation despite trying to improve its position through network adjustments, fleet renewal and new partnerships including membership of SkyTeam. Aerolineas continues to work on improving its highly unprofitable long-haul operation but the carrier is now primarily focusing growth in the domestic and – to a lesser extent – the regional international sectors.
Domestically Aerolineas benefits from a lack of competition as Argentina is not open to new entrants including low-cost carriers. Its only main domestic competitor, LAN Argentina, has been unable to expand and has had to overcome numerous challenges, including a recent attempt to evict the carrier from its maintenance base which could have forced it to withdraw from the domestic market.