Argentina has decreed that a new state-owned airline will replace Lapa and Dinar, two private carriers that collapsed this year. But the new Argentinian government promises not to stay in the airline business very long.

Lineas Aereas Federales (LAFE) hopes to take wing in the next few months after three federal departments have contributed their shares of an expected $25 million initial capitalisation. The airline will be 40%-owned by each of the economic and planning ministries and 20% by the state-owned ground handler, Intercargo.

LAFE's draft business plan calls for it to lease six narrowbody jets and to fly the domestic routes of Lapa and Dinar. It will employ Lapa's 750 former staff plus 350 from Dinar.

In a joint statement the labour and planning ministers explain: "The sole objective of LAFE is to avoid a de facto monopoly on domestic routes, as Aerolineas Argentinas dominates them with an 82% market share."

Southern Winds criticises the government for competing against private carriers. Aerolineas threatens to sue, citing its own privatisation decree, which it claims includes a government commitment to refrain from commercial activity that might compete with the airline. Government officials promise to privatise LAFE six months after its launch.

Source: Airline Business