Tuesday, May 26, 2020
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ECONOMY | 18-05-2020 17:23

Flybondi bets on flights in Argentina to survive virus crisis

Low-cost carrier will focus on domestic flights as long as demand for international travel remains subdued due to the coronavirus pandemic, says executive.

Argentine low-cost airline Flybondi is planning to redouble its commitment to domestic service once the country's strict travel ban is is lifted.

The company will focus on local flights as long as demand for international travel remains subdued due to the coronavirus pandemic, FlyBondi Commercial Director Mauricio Sana said in an interview with Bloomberg.

Flights to Brazil, the most affected country in Latin America, may not restart before May 2021, he added.

"The commitment to regional growth in 2020 is nullified," said Sana. “As travel abroad is reduced, much of the tourism will draw on the national options that emerge. Local markets will recover faster.”

The government has banned all air travel until September 1, one of the toughest restrictions in the world. Even before the pandemic, airlines operating in the country had been hit hard by an economic slowdown, double-digit inflation, and a 30 percent tax on foreign travel.

Airlines operating in Argentina are expected to collectively lose up to US$80 million on local flights cancelled from mid-March through September alone, the executive said.

Sana indicated that the date of September 1 is "exaggerated" and said he hopes the government will reconsider and allow domestic travel to restart sooner.

The private operator, which began operating in the country in 2018, has cut senior executive salaries by up to 50 percent to cut costs and keep jobs. The airline reduced compensation by 15 percent for lower-paid employees. The cuts are in effect from April through June. Flybondi also scrapped a plan to add a Boeing 737-800 to its fleet in September.

Airlines around the world struggle to survive as the coronavirus pandemic unleashes the worst crisis in the industry's history. Operators in Latin America are twice as likely as their peers worldwide to default next year, according to one study. Sana estimated that domestic flights will drop 50 percent this year. Last year, 16 million passengers travelled by air within Argentina, according to a report by Argentina's National Civil Aviation Administration (ANAC).

Before the flight restrictions kicked in, Flybondi was operating 18 national routes and six regional destinations, connecting the country with cities in Brazil, Paraguay and Uruguay. When the ban is lifted, Flybondi plans to reduce frequencies on its local routes to cope with lower demand, rather than reducing destinations, Sana said.

"We are betting that there will be no regulation that reduces the capacity of the plane due to the pandemic," he added. "We want to maintain our record of efficiency."

by Jorgelina do Rosario & Carolina Millan, Bloomberg

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