Aerolineas Argentinas rethinks domestic strategy

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Aerolineas Argentinas and its domestic subsidiary Austral are reviewing their domestic regional presence and partnerships in light of the forthcoming fleet renewal.

While the Argentine Government has usually maintained that Aerolineas' objective "is not" to make money on domestic routes, losses over the last few months have prompted a rethink.

A source at the Secretary of Transport, which oversees Aerolineas matters within the Government, says that Aerolineas and Austral will "concentrate on domestic routes where...aircraft can be operated profitably".

This could suggest that Aerolineas will aim for commercial agreements with regional aircraft operators, such as Sol Lineas Aereas, to improve the social service network. Sol is a Saab 340 operator which has been developing an increasing network of routes in northern and central Argentina over the last few years.

Sol director Horacio Darre says: "I believe that [an Aerolineas co-operation] will happen sooner or later because it's based on pure operational and economical logic.

"We started negotiations already with [former Aerolineas CEO] Julio Alak. The fact that top level conversations have been resumed after [Mariano] Recalde assumed the CEO role clearly shows that Aerolineas is aware of the convenience of operating certain regional routes with turboprop equipment."

Aerolineas has already started dropping some unprofitable domestic destinations, including Rosario, the base of Sol.

Aerolineas commercial director Juan Pablo Lafosse, speaking to ATI at the ALTA conference in Cartagena earlier this month, said the airline would continue to operate social routes but at a reduced frequency, and the switch to more efficient aircraft - such as the Embraer 190 - would cut losses. Aerolineas earlier this year ordered 20 E-190s for delivery from April 2010 and Lafosse says the E-190 is a better fit for social routes compared to the larger Boeing MD-80s the E-190s are replacing.

"Many flights aren't profitable. We know that and accept that. We know we should continue because it's a public role," Lafosse said.