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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Aerolineas Argentinas president warns costs 'unsustainable' in medium term due to large labour force
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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.
Aerolineas Argentinas is aiming to turn around its unprofitable long-haul operation by renewing its widebody fleet, adding capacity to several existing destinations and implementing codeshares with its SkyTeam partners. The airline plans to acquire 12 A330-200s over the next four years, allowing it to replace most of its A340s – the only widebody type in its current fleet.
Aerolineas remains unprofitable, an exception in a Latin American industry which has one of the highest profit margins and growth rates in the global industry. Aerolineas and its highly protectionist government owner are often criticised by more successful Latin American airline groups, with a particularly hostile backlash against Argentina taking place at the recent ALTA 2012 Airline Leaders Forum. But Aerolineas has improved its outlook significantly since renationalising and embarking on a restructuring at the end of 2008.
Fixing the long-haul network remains a challenge but the airline’s management team is putting in place the right strategies to give Aerolineas a chance to turn around - and hopefully give the government the confidence to loosen its unhelpfully protective aviation policies.
Aerolineas Argentinas formally joined the SkyTeam Alliance on 29-Aug-2012, completing an important component in the flag carrier’s strategy to reverse several years of unprofitability and lacklustre service standards. SkyTeam will allow Aerolineas to virtually expand its relatively small and highly unprofitable international network as the carrier aims to quickly start codesharing with several current and prospective members. But the alliance alone will not fix Aerolineas’ deep-rooted problems and the government-owned flag carrier still has to overcome several challenges to achieve sustained profitability.
For SkyTeam, Aerolineas Argentinas fills an important white spot in South America, a fast-growing region where the alliance previously lacked any local members. But SkyTeam still badly lags behind oneworld and Star in the increasingly important Latin American market. The alliance is now striving to woo Brazil’s Gol as a new member, which would allow SkyTeam to close the gap with its rivals.
The demise of Pluna has left a large void in the Uruguayan market that will be partially filled through expansion by carriers from neighbouring Argentina, Brazil and Paraguay as well as by tiny Uruguayan regional carrier BQB Air. The Uruguayan Government has opted against bailing out Pluna, which ceased operations on 05-Jul-2012, and is instead now trying to find another carrier (either new or existing) to take over its routes and, potentially, its employees and fleet.
But the end result will almost certainly be the the lack of a network carrier for Uruguay and the sale of Pluna’s 13 Bombardier CRJ900 regional jets to overseas buyers. While some of Pluna routes could be taken over by other carriers, there will almost certainly be a steep reduction in traffic at Montevideo’s Carrasco International Airport as the Uruguayan market is too small to support more than a handful of point-to-point routes.