TOM GILL / LONDON
Under new ownership, Aerolineas is cutting financial burden as rivals gain strength
Argentina's airlines are bracing themselves for renewed turbulence as a national debt crisis looms and a price war intensifies.
Flag carrier Aerolineas Argentinas, which hit a low point in June, is recovering as its new owner - Spain's Marsans/Air Comet group - rebuilds its savaged route network and has reduced its debt by half. Madrid is being served again, and other lucrative destinations such as Auckland and Sydney will rejoin the network this month. According to local reports, Marsans is planning to merge Aerolineas with its domestic arm Austral.
LAPA, a Buenos Aires-based Boeing 737 operator, could lose out. Now named ARG following the take-over three months ago by Eduardo Eurnekian, owner of Argentine airport operator Aeropuertos 2000, it has this year grown traffic and won a 17% Argentine market share largely at the expense of Aerolineas.
Southern Winds claims its strategy of linking regional capitals with regional jets for business passengers will protect it from the flood of new Aerolineas capacity. It points to a net result of $500,000 in the year to 31 June while rivals wade through a sea of red ink. President and majority owner Juan Maggio is the USA for talks to arrange the lease of four Boeing 727s for a March launch of services to Madrid and Miami.
All airlines remain optimistic they can ride out the country's gathering financial crisis, which threatens to deepen the four-year recession. They argue that demand is relatively inflexible. The government's move last week to impose a partial freeze on bank deposits will not stop their clientele of credit card-wielding high earners buying tickets, they add.
However, since the November upswing in Aerolineas's activity prices have been slashed by up to 50%. The last price war started in 1995, lasted five years and almost wiped out the domestic airline industry.
For now, all airlines report that lower fares have stimulated traffic, but concede this type of competition cannot be sustained for long.
Source: Flight International
