Argentina Earns the Cranky Jackass Award for Propping Up Aerolineas Argentinas at the Expense of Real Competition

There have been so many good news stories about aviation in Latin America lately that it seems like everything is going well. The LAN and TAM merger created a powerhouse, the Avianca/TACA merger is also coming together quite nicely, and then of course, there’s little Copa rocking it in Panama. So is anything going wrong in Latin America these days? Oh yeah. We just haven’t looked far enough to the south.

Aerolineas Argentinas is a disaster of an airline that loses silly amounts of money providing a sub-standard product. (But hey, at least you can send a fax from onboard.) So why does this crappy airline still exist? It’s the same reason just about every crappy airline still exists – government funds keep propping it up.

But in the case of Argentina, it’s more than just government funding that helps Aerolineas Argentinas. It’s also a host of blatantlyCranky Jackass unfair policies that prevent a real airline like LAN from providing good service to the people that need it. LAN Argentina started a few years ago but it has had nothing but trouble since it first tried to challenge Aerolineas. A recent La Nacion article about five things the government of Argentina has done to hurt LAN (and competition in general) caught my eye.

I should say that it’s not easy to catch my eye when articles are written entirely in Spanish. But using my rusty Spanish language skills, I was able to decipher what simply didn’t seem like it could be true. So I reached out on Twitter and got a little help from @HouseofV to fill in the gaps. It turns out things were even worse than I thought. This would be funny if it didn’t mean that the people of Argentina are suffering because of it. So for that reason, I’m very happy to award the Cranky Jackass to Argentina for all kinds of suckiness. Let’s review.

1) No jet bridges for LAN
Back in 2010, a law was apparently passed that said Aerolineas Argentinas got priority for using all jet bridges in the country. Originally, nobody else could use them, but then that changed so that airlines could use them for up to two flights a day. That naturally works for some of the foreign carriers with limited flying, but it doesn’t work for LAN Argentina with a lot of domestic flights. But LAN did work around that and had a contract to use jet bridges.

If you’re flying on LAN in Argentina today, however, you’re going to be in for a surprise. All those nice covered jet bridges are off limits for LAN passengers now because the airline has been cut off. But it’s not just that they’ll have to walk up and down stairs. The airplanes are parked remotely meaning that people need to take buses back and forth between the terminal and the airplane. That slows things down and makes LAN less attractive to travelers. But why?

Guess who does all the ground handling in Argentina? It’s a group called Intercargo. And guess who owns Intercargo? That’s right, the government does. It turns out that LAN signed an agreement to have Intercargo handle its ground ops, and that agreement was to go through the end of March, 2014. But then Intercargo decided that contracts don’t really matter, and it alerted LAN that rates were going to rise by 55 percent. When LAN balked, Intercargo just stopped letting them use the gates. Now it looks like this.

2) Attempts to hurt LAN in Buenos Aires
Buenos Aires has two airports. Ezeiza is the main airport for international operations while close-in Aeroparque is used for domestic flights. At least, that was the case until 2010 when Aeroparque was also opened for flights to Brazil, Uruguay, and Chile. As you can imagine, business travelers flocked to Aeroparque from places like Sao Paulo and Santiago because of its convenience. But then guess what happened? The decision was made that LAN wouldn’t be allowed to fly internationally from Aeroparque in order to, of course, protect Aerolineas. Only after the surrounding countries threatened to block Aerolineas did they finally back down and let LAN fly, but LAN still only has a few slots while Aerolineas has many more.

3) No Rosario for LAN
Rosario lies about a 3 hour drive northwest of Buenos Aires. It’s a city with over a million people (third largest in Argentina) and it’s an important industrial center. LAN began flying from Rosario to Lima in order to connect people to important destinations internationally and the flight appeared to be doing well. Then a funny thing happened. The government told LAN its flight couldn’t continue. Instead, Aerolineas added Rosario as a free add-on to international flights in Buenos Aires so it could steal all the traffic.

4) Handcuffs on LAN’s Growth
Unsurprisingly, Miami to Buenos Aires is a good market. American flies it twice daily while LAN flies it once. Aerolineas flies it 11 times weekly. LAN wanted to add another flight in the market, but that wasn’t allowed. Instead, the government gave more flights to Aerolineas instead. Oh, and it also put the brakes on an investment for LAN to grow the fleet.

5) Summer charters only if approved
Lastly, it’s common for summer charter flights to pop up to take people from Buenos Aires to vacation destinations. The policy now, however, is that those flights can only operate if Aerolineas is going to be full.

What’s the end result of all this madness? People in Argentina suffer from poor service on a money-losing airline. New entrants are stifled and that isn’t going to change. In the meantime, Aerolineas lurches forward with attempts to get new airplanes. It hopes for success now that it’s a member of SkyTeam. But really, it’s unlikely to happen. And the people of Argentina will continue to pay the price until the government lets real competition into the country.

Get Every Post Emailed to You

There are 26 comments Comments


Your email address will not be published. Required fields are marked *