Argentine regional carrier Sol Lineas Aereas is considering setting up a Uruguayan subsidiary to operate long haul flights using Airbus A340s.

The airline admits being in conversations with the Uruguayan Government over setting up a local airline, based in Montevideo, with the initial objective of re-establishing direct air connections to Madrid. Uruguay's Pluna abandoned this route last September, leaving Iberia as the sole non-stop operator on the route.

Rosario-based Sol's director of planning, Horacio Darre, tells ATI: "We are preparing the documentation to initiate the process of creating a Uruguayan air operator's certificate and the constitution of a local subsidiary together with a Uruguayan partner."

The partner is necessary because regulations demand 51% local ownership of airlines. While the eight-month certification timeline could mean the carrier will be operating by the end of this year, Darre is cautious. "The process can be extended by six-month periods. It is too early to announce a launch date in the current rapidly-changing economic environment."

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But he sees an opportunity for the right business plan. He claims Pluna failed to capture enough market share because it flew only thrice-weekly, via Brazil to avoid weight penalties. Pluna, he says, was left with just a 13% share and low-yield passengers, leaving Iberia with a "virtual monopoly even before withdrawal".

"Our approach will be completely different," says Darre, adding that the carrier will capitalise on Montevideo's position as the only international airport allowed connections with Buenos Aires' downtown Aeroparque airport.

This will increase "significantly" the catchment area for the service, claims Darre, because many passengers would prefer to change aircraft at Montevideo than take the long journey to Buenos Aires' Ezeiza International Airport.

"We are already operating between between Aeroparque and Montevideo with Saab 340 turboprops, so we know the market pretty well," he adds.

The Uruguayan carrier will have a "couple of used A340s" and operate daily, or almost daily, non-stop services to Madrid and, eventually, other long-haul destinations.

Darre says the A340 is the preferred type for its "lower capital cost and good range and cargo capacity". He adds: "We will also have a commercial alliance with a Spanish carrier in place, another element which Pluna lacked at the moment they were flying to Madrid."

After abandoning Madrid, Pluna signed a comprehensive codeshare agreement with Iberia, suggesting that only the rival SkyTeam and Star Alliance partners - respectively Air Europa and Spanair - would be open for a tie-up.

Argentine ferry operator Buquebus has also responded to calls from the Uruguayan Government to establish a new long-haul carrier, claiming it is prepared to lease "a couple" of Airbus A330s for the Madrid route.

The company has two ATR 72-500s on order for its Uruguayan start-up BQB Air, and intends to operate a Montevideo-Aeroparque air shuttle later this year. Buquebus initially announced that its regional operation would start in June, but it is no longer giving a firm agenda for the launch.

Although the company maintains that it will serve small regional Uruguayan airports at Colonia and Salto, a transport ministry source source confirms that he expects the airline to operate the Aeroparque-Montevideo shuttle, as well as flights to Punta del Este.

Source: Air Transport Intelligence news