In case you were wondering, no, México and Italy do not have a monopoly on bad airline strategies. Argentina has long been one of the standard-bearers of bad airline policy, manifested in the woeful performance of its flag carrier Aerolíneas Argentinas. Now the country is ready to cut ties after re-nationalizing the carrier 15 years ago. If this happens as suggested, this will be the end of Aerolíneas Argentinas, but let’s be honest… bad airlines never truly die.
Argentina has long protected its flag carrier with a vengeance. The airline has only occasionally been asked to turn a profit, depending upon the government’s whims. But don’t worry, the pressure was never that great, certainly not since it was re-nationalized 15 years ago. The only thing that makes Aerolíneas Argentinas more viable than, say, Alitalia/ITA is that the Argentine government was much better at propping up the flag carrier and pushing out competition for most of the airline’s history.
Strangely enough, Aerolíneas has been pretty consistent with its seat capacity remaining between 50 and 60 percent for all departures from Argentina. Just take a look.
Argentina Departing Seat Capacity by Airline
This chart isn’t completely right, because Flybondi started flying in 2018, but I don’t show schedules in the data until 2022. So chances are that baby blue Aerolíneas should be even more consistent. The airline just trades competitors depending upon how the winds shift politically.
Just ask LATAM, the airline that had designs on creating a functional, commercially viable operation in Argentina. It never truly succeeded thanks to protectionism and finally shut down LATAM Argentina in 2020 as some of the most strict COVID protections in the region proved to be the final straw. The laundry list of problems is lengthy and sordid. You can read about some, including the Aeroparque hangar drama here.
Low-cost operators have replaced LATAM’s presence in recent years. The door opened when Mauricio Macri became president in 2015. He allowed competition in the country, but it hasn’t been easy for those airlines. Back when Norwegian was full of nothing but bad ideas, it made a run in the domestic market, but that was sold off to Jetsmart. That airline and Flybondi have been locked in a battle for relevance. Flybondi is reportedly profitable, but it still only has 15 airplanes. After 5 years, that doesn’t seem like all that much for a low-cost operator. Even with low costs, competing with heavily-subidized Aerolíneas is an uphill climb.
But now, the government of Argentina has seen a seismic shift. The often-reigning left-wing Peronistas have lost control, only to be replaced by Trump-like, right-wing populist Javier Milei. Milei wants to slash and burn within the government ranks, so naturally the subsidies propping up Aerolíneas are an easy target.
According to Argentinian newspaper Clarín, Milei has a plan. It’s a bad one in the sense that it will never actually work from an Aerolíneas perspective. But it would be good for travelers in the longer run.
Milei wants to stop subsidizing the airline and create an “open skies” policy that would allow competition to flood the market. How would Aerolíneas survive in this new world? Well, he would turn the airline over to be employee-owned and run. Oh yeah, that’ll work.
Milei is trying to navigate a complex situation here. As with most poorly-run, state-dependent carriers, there are too many employees and they are overpaid for the work they do. It’s like a state-run jobs program, and killing that is a political hot potato. So give the airline to those people to run, right? Riiiiight. Generally, letting the inmates run the asylum is not the best plan. But Milei says they can do it.
El personal de Aerolíneas es un personal muy calificado, el problema radica en la contaminación política
Milei is saying that the politicians have ruined Aerolíneas and the employees will be able to save it. That is most certainly not the case, but it does set up Milei to blame those employees for the failure of the airline when they can’t right the ship instead of himself. Whether anyone will buy that narrative or not remains to be seen, but… ok, nevermind. Nobody will care.
In the long run, this will be good for competition. It will allow better airlines to provide service to a lot more people in the country. But with nearly 12,000 jobs in the balance in a country that’s been hit hard by high inflation and a weak economy, Milei will have to make a decision when the time comes to bail out the airline again or let it die, the two inevitable possible outcomes. His best hope is to wait until he’s voted out of office and make it someone else’s problem.
