DAVID KNIBB SEATTLE
Foreign airlines are reducing their Argentinian services as the country's economic crisis deepens.
Devaluation of the peso has brought short-term pain to carriers who must now honour tickets sold in pesos when the currency was still pegged to the US dollar. The peso is now worth 50% less.
Emergency exchange controls have brought bigger worries and among the US carriers, United Airlines has complained the loudest. Local manager Carlos Bragado told Buenos Aires media that United only uses 10% of its Argentinian revenue for local expenses, but is still required to leave the other 90% in local banks. "Other countries in the world do not have this problem of blocked funds and for that reason they are more attractive," Bragado warns.
Argentina's courts have since declared some of the emergency controls unconstitutional, but the legislature is studying ways to reinstate them. The biggest problem is a drop in international traffic. As Argentinians queue at banks to exchange their pesos, traffic at Ezeiza airport in Buenos Aires, the country's international gateway, is down 43%. Regional traffic with Chile has plunged 60%.
LanChile has cut a quarter of its Argentinian frequencies. Brazil's TAM has reduced its Buenos Aires services to S‹o Paulo, Montevideo and Asunci¢n. Malaysia Airlines dropped its route from South Africa for several reasons, but says a key one was the slump in Argentinian traffic.
Traditionally strong traffic with Europe is also down. Lufthansa has kept its Santiago-Buenos Aires-Frankfurt schedule, but local manager Christian Preuss notes that the proportion of Argentinian passengers has slipped from 60% to 45%. Air France has combined Chilean and Argentinian flights, halving total service to South America's southern cone. British Airways has also halved its frequencies, while Alitalia says its Buenos Aires-Rome traffic is down 50% despite a fare war with Aerolineas.
The Argentinian carrier remains under court supervised bankruptcy protection until November 2002. It is operating international services to most Latin American countries, and to Madrid, Auckland, Sydney, Miami and Rome, as well as rebuilding its domestic network under the control of new owner Spanair parent Viajes Marsans.
Source: Airline Business
