Argentina's free-falling economy is taking its toll on the country's domestic and regional carriers as industry-wide load factors plummet and airlines face dwindling revenues.

With expenses pegged to the US dollar and income received in massively devalued Argentinian pesos, forecasts indicate that Argentina's air transport industry might experience the worst crisis in its history this year.

Paran -based regional airline Lineas Aéreas Entre Rios (LAER) suspended operations in mid-April when lessors repossessed its three BAe Jetstream 32s and two ATR 42-300s after it defaulted on lease payments. Reduced to one Fokker F28 Mk1000, LAER was unable to operate when maintenance personnel refused to perform any scheduled work until the airline settled overdue wages.

The airline is 90% owned by the province of Entre Rios and 10% by the airline's employees, but privatisation may now be the only way to ensure its survival - a task made all the more difficult by Argentina's current financial crisis.

Meanwhile, Rio Grande-based Transportes Aéreos Petroleros (TAPSA), which serves southern Argentina, filed for bankruptcy protection late last month. TAPSA operates cargo and passenger services to seven destinations with a pair of de Havilland DHC-6 Twin Otters. Local analysts doubt whether TAPSA will survive.

With international routes suffering a 75% drop in load factors, many of the larger Argentinian carriers have been equally hard-hit, despite many foreign carriers reducing their number of weekly flights.

Government pressure to maintain fares at their current Argentinian peso value has aggravated the crisis, as fuel costs, lease payments and spares are settled in US dollars.

Moreover, the government decided this month to charge airport fees for international flights in US currency which, local analysts believe, will reduce load factors even more by imposing higher costs on incoming passengers.

Source: Flight International