LAN was forced to cancel all domestic and international flights to and from Argentina on 17 May after state-owned ground handler Intercargo refused to continue servicing LAN Group aircraft. LAN eventually resumed operations on 18 May at 08:30 after the situation was resolved.
Intercargo announced on 16 May that it would stop serving all LAN Group carriers "starting on Friday". On 18 May, Intercargo said it had reached an agreement with LAN, suggesting that the Chilean airline group gave in to Intercargo's demand of a $15 million supplement on top of the current contract it has with the ground handler.
LAN apologised to its customers affected by the unexpected grounding of its flights, "caused by Intercargo's incompliance [with] the valid service provisions contract it holds with LAN until March 2014". It declined to comment on an eventual agreement with Intercargo, but pointed out that LAN's position has been supported by several court decisions.
On 17 May, LAN obtained a new court interjection to oblige Intercargo to honour its contract and continue serving LAN flights, but despite the fact that the court submitted the case also to a criminal court, LAN's Argentinean flights were grounded after 17:30.
An Intercargo spokesman tells Flightglobal that the company "had no choice but to suspend services provided to LAN because LAN declined to pay the bills [at the new prices fixed in 2012]". He says that the Argentinean government "supports Intercargo's claims and decisions".
Intercargo had previously tried to raise LAN's handling fees on several occasions, but LAN has maintained the position that it has a valid contract with clearly defined commercial conditions. LAN has so far been supported by local courts, which have mandated that Intercargo must continue serving LAN.
Several weeks ago, Intercargo stopped providing jet bridge services to LAN flights, forcing the Oneworld carrier to temporarily bus its passengers to remotely parked aircraft. However, a court forced the handling operator to resume those services a few days later.
LAN, the main competitor of state-owned Aerolineas Argentinas, is Intercargo's largest customer and has historically received volume discounts, which were revoked last year despite the existence of a long term contract.
An Intercargo source says the Argentinean government had ordered the ground handler to "treat all airlines equally".
Intercargo holds a monopoly in the ground handling business in Argentina, where there is no independent regulator for ground handling activities. This has led to concerns over service standards and competitiveness.