All Eyes on Argentina (Hopefully to See Something Good)

It’s not often that a highly-protectionist regime disappears leaving vast opportunities for air travel growth, but that’s what we’re seeing in Argentina right now. That’s good news is many ways, but it’s also going to cause a whole bunch of headaches from a logistical perspective. Get ready for a flood of new service. I hope this goes well.

Until it ended in 2015, Argentina spent more than a decade under the Kirchner regime. First it was for four years followed by his wife for eight. They were populists, and they viewed Aerolineas Argentinas as THE domestic airline, an arm of the government. Aerolineas Argentinas had an aging fleet and was shockingly inefficient yet it had near dominance over the country’s domestic market. While LATAM was able to mount some semblance of a competitive effort, it wasn’t without having to overcome all kinds of massive stumbling blocks. Those shenanigans even earned the entire country a Cranky Jackass Award.

In 2015, was elected, and he came in with a focus on fixing the broken economy. That meant he opted for a more globalist approach, and he wanted to open up previously-closed markets. Air travel was expected to be one of the big beneficiaries, though Aerolineas Argentinas itself would likely be one of the biggest losers. Having enjoyed a near-monopoly for so long, Aerolineas Argentinas never had to worry about being inefficient or… good. That’s now going to change, because Macri wants to encourage new entrants and foreign investment. He’s hoping to double domestic air traffic in the next few years. That enthusiasm is bringing some very interesting players into the country beyond LATAM. Most notably…

  • is a low cost carrier that says it hopes to have 4 aircraft operating by the end of the year. It has big plans with 28 airplanes and dozens of destinations operating by 2021.
  • Avianca Argentina is only tangentially-related to Avianca itself and is based on the ashes of Macair Jet. The airline plans to fly ATR turboprops on secondary routes.
  • Norwegian, yes, Norwegian has no place to put all of its airplanes in the winter. So… Argentina! It sounds insane, and it is. But the airline is as well as long haul over to Europe from Buenos Aires.

There are others too, but until we actually see some money and some airplanes, it’s hard to know who will actually get this off the ground in a sustainable way.
Now here’s the thing. With the exception of piddly little Avianca Argentina (for now), everyone is gunning for Buenos Aires. It’s the capital, the economic center, and its metro area has about 30 percent of the entire country’s population. And Buenos Aires is a mess when it comes to airport infrastructure.

There are two main airports serving the city. Here’s a map:

The main international airport is Ezeiza, southwest of town. It’s where all long-haul flying happens along with most shorter-haul international flying. But it still plays second fiddle to Aeroparque which sits right on the water and is close to the city center. Aeroparque is hemmed in by the city and is pretty much built out. It used to be domestic-only but in recent years it has opened up to regional international destinations. This is going to change, however, because well, they need more room.

In the next couple of years, the government is going to with the exception of Uruguay flights. (Uruguay is so close they kind of consider it domestic-ish.) This is meant to free up space for new entrants to come in and wreak havoc.

For those math whizzes who counted to three when looking for airports on the map and not two, good work. That third one is El Palomar. The old military base is opening up to commercial traffic. And Flybondi is very interested. In fact, if it gets its way.

The split domestic/international airport is terrible for people who live in Argentina but outside Buenos Aires. It means that connecting options are much more scarce to the outside world than they otherwise would be. But there could be much greater utility if low cost carriers come in and bring lower fares to domestic routes.

But oh, about that. Apparently there is still price regulation domestically in Argentina. , the maximum price threshold has been removed, but there’s still a minimum. That’s going to put a huge damper on those low cost carrier dreams. With the current government’s views, I won’t be surprised if that changes. Heck, something is probably already under discussion. But that could be the end of Aerolineas Argentinas if they aren’t careful. (Maybe an Argentinian reader can give us a status update.)

There is pent-up demand in Argentina, but there’s a lot of regulatory baggage that has prevented it from being realized. With a new government, the engine is there to finally provide Argentina with a half-decent air transport system. But the infrastructure is going to have to catch up. Let’s hope that happens before the passengers start arriving in droves.

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