Postby Gabriel » Thu Nov 23, 2023 3:40 pm
[EDIT: I promise I intended this to be not a long post. But I failed miserably. Point 2 was budgeted to be as long as point 1, but as kept researching and finding data that I thought was interesting it went out of control. Where is that picture of the guts of the 737 again?]
On a serious note, Argentina is different than Flyover and Aerolíneas Argentinas is different than any airline in the USA.
Aerolíneas Argentinas runs as a deficit for 2 reasons:
1- It is incompetently run by unions. Not in the papers, but factually. Many top managers are union leaders, and if there is some decision they don't like thy just strike and riot. The AArg employees make more money and have more benefits (paid vacation, paid trips...) than other airlines in the region.
2- Argentina is a big country by land area and by length. Actually, it is in the top-10 of biggest countries in the world. But it runs 33 by population. Few people in a very big area to cover. But it gets worse. 1/3 of the population lives within 50 miles of Buenos Aires. There are only 2 other metropolitan areas with more than 1 million, and 10 metro areas with more than 250,000. Other than that, you have a few high-demand business or touristic places like Calafate, Iguazu, Bariloche, Ushuaia where airline service makes business sense. That leaves about 1/2 of the population far away from places where flying makes business sense. Some of the "economically feasible" destinations are served by other airlines. But Aerolíneas flies to 22 destinations not served by any other airline. That means that it flies to more destinations not served by other airlines than destinations served by other airlines. Eliminating airline service to most of the destinations would cause an immense harm not only to the people, but also to the regional economies and the national economy. The president will need to make a choice between a) keeping the airline in the hands of the state and trying to make it as efficient as possible while still providing this social service at a loss, b) Eliminating all subsidies to Aerolíneas Argentinas which will be a death certificate for the airline, regardless of whether it is handed to the employees, privatized, or outright shut down, or c) establishing a system of bidding for all the destinations that are not economically viable. That would mean that the state still subsidizes a good portion of air travel, but would put the all the airlines on equal grounds, make them compete, and there is a slight chance that a privatized (or employeezed) Aerolíneas Argentinas may survive if the employees and/or new owners get their acto together. However, this solution still implies that the state would still be giving strong subsidies to the aviation industry, just not directly to Aerolíneas Argentinas. So I am not sure if the new president (who made his campaign with the slogan of using a chainsaw to slash the state deficit) is willing to do that.
This could be a good time to implement option c). Aerolíneas Argentinas has a 65% of the domestic market (down from 75% in 2021). However, it is flying more passengers than ever because the air travel is skyrocketing. The other 2 main airlines (Flybondi and Jet Smart) grew more than Aerolíneas, but still only serving the high-demand destinations. In a time where the market is expanding it may be good to add competition and the other 2 airlines may show an interest in bidding for unprofitable cities.