Chile’s LAN has long been my favourite Latin American airline. One year ago, they merged with Brazil’s TAM to become easily the continent’s largest carrier. The second largest carrier in the region, is Avianca/Taca then Brazil’s GOL and Brazil’s Azul (started) by Jet Blue’s founder.

 

Aerolíneas Argentinas , one of my least favourite carriers probably sits at fifth place in the Latin market, by destination and fleet size -but not by service, quality or profitability. Rated as a three star carrier by Skytrax, its customers rate it a 2.0 out of ten. Some of my favourite customer quotes from the Skytrax site:

• felt like I have stepped back in time when flying with this airline
• ” The girl in front of me ordered a vegetarian meal as did I. Of course they did not have it. They never have vegetarian meals.”
• The TV that I could see did not work….Seats are tired and sagged
• The cabin service was a disaster, staff treated passengers in a disrespectful manner
• “Passengers asked to wait in a lounge, then abandoned. “.
• I now will travel with any other airline, never Aerolineas Argentinas again.

In 2010,  Air Transport World, found that the more Aerolíneas Argentinas flies, the more it loses. On average the airline earnt 7.39 cents for each seat/km offered while each seat/km cost them 9.2 cents.  According to Noticias, the airline lost  $US976 million in 2012, its largest deficit recorded in the last 21 years. On average, Aerolíneas Argentinas has lost over $US3 billion  since July 2008 (approximately $US2.7 million per day).

Who would support such an airline?

The Argentinian government who seem to have decided to do all they can to protect their carrier. Their target? Any foreign airline that dares to compete with Aerolineas including  LAN Argentina which has 32% of the Argentinian market, operating 14 planes to 17 domestic destinations carrying 2.3 million people.

The undermining actions by the government that have impacted LAN include:

• For summer charter flights, LAN was only allowed to fly when Aerolíneas had filled all of their jets (2011)
• The Argentinan government prevented LAN  from flying direct from Rosario  (Argentina’s third largest city) to Lima, Peru. Aerolineas then added Rosario-Ezeiza  as a free add-on to international flights (2012)
•  LAN prevented from flying to regional destinations from Buenos Aires domestic Aeroparque airport (AEP) while Aerolíneas Argentina continued these flight (2012)
• LAN denied permission to add another aircraft to its fleet by the Government (2012)
•  LAN  allocated fewer slots at Aeroparque domestic airport than Aerolíneas Argentinas (2012)
•  LAN threatened that they would have to move their domestic flights from Aeroparque to the International airport EZE which is located further out of Buenos Aires (2012)
•  LAN could no longer  use airbridges at Argentinian airports.(2013)

Now in the latest move, last week, the Argentinian National Airport Agency ordered LATAM out of its rented hanger at Buenos Aires’ domestic Aeroparque airport by 31st of August. The airline invested $US5 million in the facility in 2008 and pays $US 20,000 a month for rent. Without the use of this hangar LAN’s short- and medium-range fleet potentially cannot be maintained within Argentina, putting at risk its entire domestic operation.  Lan Argentina represents 9.2% of the LANTAM group income. At least 1,500 LAN employees would lose their jobs if the eviction goes through. LAN went to court in Argentina on Monday to appeal its eviction from a hangar.

The Association of Airplane Pilots promised that all its members will strike if LAN employees are fired.

This news from Argentina is a blow for LAN which is struggling with a soft Brazilian economy and a loss announced in August of $US300 million. It is positive about its future as it rationalise long haul flights, sees growth in Brazil and overcomes currency fluctuations. One hanger may represent a blockage to LANTAM’s expansionist ambitions.

The future in Argentina? Until the protectionist government changes in that country, LAN will continue to experience trouble and Argentinians will continue to get bad service and subsidise one of the worst airlines in the world.

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