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July 22, 2024
Aerolineas Argentinas Cargo

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Argentina has an impressive list of fantastic meals and drinks, but coffee is not one of them. Nevertheless, one of our favorite phrases is “Let’s get a coffee” as an invitation to talk about important things. So when someone from the Transport Secretary’s Office called for us to meet, I knew there were important things to be said. And that coffee was going to be around.

We wanted to create an ’empiric shock’ to get things moving,” says a well-connected source within the Secretary. In addition to a presidential decree signed in the early days of Javier Milei’s tenure, the government aims to modify the Aeronautical Code, which governs all aspects of aviation in the country. It has not been reviewed since the 1970s and begs for an update—and not for a lack of trying.

Five groups were formed to push changes to the Code, for them to cover all aspects and interests of the Code update”, the source reveals. “From Airline CEOs to unions, we wanted to get as much insight as possible.” But of course, that can lead to conflicting points of view: “We presented our final draft to the President, even with those topics where an agreement could not be reached. Ultimately, he’ll decide what way we’ll go on the bill that the Congress is getting.”

All we are is basically what we aren’t

As in a definition by negation, Argentina’s government wants to change the current philosophy, based on a book written in 1946 by Dr. Enrique Ferreira, who declared that commercial aviation is a public service and that, above all, is a matter of sovereignty and therefore, subject to government regulation.

The current Argentinian administration knows that this view is “anachronic” and that the state must not intervene in the development of a market. What remains unclear for now is, besides the constant and repeated advocacy for “freedom”, what model should replace Ferreira doctrine.

So far, the government has signed two MoUs with Chile and Uruguay, reciprocally allowing as far as the ninth freedom of the air. In one case (Chile), with a country that already enables foreign carriers to operate domestic flights and the other country lacking a domestic market and a national carrier.

“We want to see Latin America as a big market instead of separated local industries. It would be a huge step forward”, the source cites the European market as a long-term goal. First, a few things need to be covered, as the European Single Market was born in 1992 and took decades to complete, with a common currency and a certain political stability. Two things are scarce in Latin America, as no political force can think beyond eight years or two consecutive terms if they’re lucky.

There were agreement updates with Peru, Ecuador, and Brazil, but they didn’t go beyond an unlimited fifth freedom. Therefore, the longing for a common view on the subcontinent for the unrestricted opening basically stops there. So, a common Latin American market, “á la Europe,” is out of the question. What model should we pursue next?

“Some people want us to go full Singaporean, with a Part 129 permit, and that’s it,” states the source. However, he acknowledges that a big factor not present in Southwest Asia and ubiquitous in Argentina is the force of unions. “We should find a way to allow foreign aircraft, but for them to be flown with Argentinian crew on domestic flights.” 

I mentally digress for a moment, lost in the thought of a carrier wanting to fly a domestic route in Argentina (a profitable domestic route) with local crew and its uncompetitive labor agreements when it could perform the same thing with the eighth freedom, to sign a codeshare with one of the brave gents that has gone through the ordeal of getting an Argentinian AOC or to stay the hell away of the idea, as there are really few profitable domestic traffic and current route operators are fighting to fill their planes.

“The government considers Aerolíneas Argentinas as just another operator”, he says, reaffirming that it either becomes a profitable company by itself or with a private investor – provided the privatization process can finally move forward-or it will close for good. Leaving the Ferreira Doctrine implies that subsidies are soon to be gone, and the flag carrier will have to fight to survive.

“It must follow a commercial goal. For strategic connectivity needs, the government has LADE”, the Air Force transport venture that consists of a couple of Twin Otters, a couple of SAAB 340s, a Fokker 28, one Boeing 737-700, and two Embraer 140s. So, the future of Aerolineas is still on thin ice despite some people thinking it got off the hook by escaping the list of companies to be privatized in the most recent bill sent to the Senate.

(They) have a dream

However, all that means no obstacle for the Secretarial source that engages in really, (really, really) wishful thinking by saying, “We’re not there yet, but just imagine a ninth freedom agreement with Brazil, a 200-million-passenger market.”

There are more chances of the Brazilian National Soccer Team relinquishing its five World Cups to Argentina than of the Brazilian domestic market opening without restrictions to any country. Still, hey, I won’t be the guy standing between a man and his dream.

I left the meeting with two certainties: one, the Argentine government is set to change things at a fast pace, hurried by a time constraint, as it must present results before the 2026 mid-term elections, and aviation is one way to do it. The second certainty is that revolutions that seek change without understanding the context rarely succeed beyond killing the Queen, and Aerolíneas Argentinas, as we know it, should be really worried about what’s to come.

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Pablo Diaz
Pablo Diaz is an award-winning journalist based in Buenos Aires, Argentina. He is also Editor In Chief of Aviacionline.com. Law, Engineering, and a pinch of science. When in doubt, trust evidence.

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