Argentine airlines prepare for industry shake-up | Airlines

Cristina Fernandez De Kirchner Y Javier Milei Cropped 1.jpg

On November 19, 2023, Javier Milei’s victory in the Argentinian presidential election sent shockwaves through Latin America, and indeed the rest of the world.

The self-proclaimed libertarian candidate ran on a platform that promised to conduct an entire shake-up of Argentina’s economic and institutional system, including some controversial proposals such as the closure of the country’s central bank.

Picture: Cámara de Senadores de la Nación Argentina.

Whether the incoming president is able to deliver on his program or not, commercial aviation is likely to play a prominent role in the upcoming rounds of economic and financial reforms.

Given its iconic status and chronic financial underperformance, the country’s flag carrier, Aerolíneas Argentinas, has been singled out as one of the first state corporations due for restructuring.

However, the status of one of the continent’s largest and best-known airlines may be an indicator of the overall health of the Argentinian airline industry, which, in the past few years, has seen its fortunes tied to the political cycle.

In the development of a local air travel industry, Argentina has lagged behind other countries in the region such as Brazil, Chile and Colombia. Relative to the size of the country and its income level, Argentinians travel less by air than their neighbors. This has been attributed to a rigid policy and regulatory framework that has traditionally hampered the emergence of a local low-cost airline industry.

Under President Mauricio Macri, who was in office from 2015 to 2019, Argentina toyed with the liberalization of its air travel sector. A key measure was the elimination of price controls, which prevented airlines from implementing the revenue management techniques that enable them to best match pricing and demand.

After these liberalizing measures were implemented in 2016, Argentina’s airline industry saw a sudden influx of investment.


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