Summary
- President Milei proposes an open skies policy in Argentina to permit any foreign airline to operate within the country, potentially increasing competition, and lowering prices of travel.
- The privatization of Aerolineas Argentinas is imminent, with the goal of constructing the airline profitable. This will result in the elimination of localized regional routes.
- Privatizing Aerolineas could create opportunities for other South American airlines to expand within the Argentinian travel market, difficult the dominance of LATAM Group and Avianca Group.
The President of Argentina, Javier Gerardo Milei, was elected to the presidency in 2023 and officially took office as president on December 10, 2023. Since then, Milei has made waves with several of his proposed aviation policies. The newly elected president initially proposed a plan to denationalise the Argentinian flag carrier, Aerolineas Argentinas, in late November. He proposed distributing shares of the airline to its employees. Moreover, on December 20, President Milei proposed to ascertain a brand new open skies policy for the country. This could allow airlines from any country to operate within the country, with either domestic or international flights. Several restrictions could be required for airlines to operate flights within the country.
Latest open skies policy
On December 20, Milei announced on a national broadcast several recent plans to assist deregulate many areas of the federal government. Included on this broadcast were several ideas to vary the aviation sector of the Argentinian economy. Included on this proposal was the implementation of an open skies policy through provisions of several established laws.
Per AviaciOnline, Milei stated,
“These reforms, of which I even have only mentioned 30 of the greater than 300 included, are a number of the ones contemplated within the DNU we signed today. The target is to start the trail of reconstruction of our country, to return freedom and autonomy to individuals, and to start to dismantle the big amount of regulations which have impeded, hindered, and stopped economic growth.”
An open skies policy would allow any foreign entity to operate flights in Argentinian airspace. The airlines would have access to flying either domestic or international routes through the airspace. Nevertheless, all airlines must show technical and financial solvency to operate in Argentina.
Photo: Vincenzo Pace | Easy Flying
This measure is supposed to enhance Argentina’s economy and offer more flights from different carriers. This will increase competition within the airspace and alter the costs of flying in Argentina. Lower prices of travel may help spur economic growth. Nevertheless, critics say that opening the skies will hinder the expansion of Argentina’s own airline, Aerolineas Argentinas.
Privatizing Aerolineas Argentinas
Also included in Milei’s broadcast were several acts that assist in bringing his plan of privatizing the nation’s flag carrier to fruition. Per AviaciOnline, Milei introduced the repeal of regulations that prevent the privatization of public firms and the repeal of the state-owned firms’ regime.
Photo: Vincenzo Pace | Easy Flying
Since Milei became president, the privatization of Aerolineas has turn out to be imminent. In the primary half of 2023, the airline still lost nearly $50 million, despite the fact that it was the airline’s best financial leads to over fifteen years. After the airline becomes private, significant structural changes would likely be implemented. The changes would deal with ensuring the airline becomes profitable. Subsequently, the brand new ownership would likely deal with operating only profitable routes. This could result in the potential elimination of localized regional routes.
Moreover, privatizing Aerolineas could allow other South American airlines to expand into the big Argentinian travel market. Currently, LATAM Group and Avianca Group are inclined to dominate the South and Central American markets. Aerolineas could have difficulty competing with these airlines on popular existing routes.