LATAM’s exit – and Aerolíneas’ monopoly

LATAM’s decision to discontinue domestic flights in Argentina took many people in the aviation market by surprise, despite the airline having filed for Chapter 11 on behalf of its branches in Chile, Peru, Colombia, Ecuador and the United States. Since neither Brazil, Paraguay nor Argentina had been included in this decision, Wednesday’s announcement of the airline’s withdrawal from this country came as something of a shock.

Even if LATAM’s exit from the Argentine domestic flight market is a consequence of the coronavirus crisis, many analysts in the sector believe it could favour Aerolíneas Argentinas, permitting La Cámpora, which controls the flagship carrier, to fulfil its dream of returning to an Aerolíneas Argentinas monopoly. LATAM operated out of Aeroparque Jorge Newbery and its withdrawal from domestic flights leaves Aerolíneas as the only airline operating out of the City airport.

It remains unclear what is going to happen with El Palomar, the departure point for two low-cost airlines, Flybondi and JetSmart. The government could decide that all the flights from these companies must fly in and out of Ezeiza international airport. This would add to the cost of transfers since El Palomar can be reached for just 25 pesos, thanks to an ample service of public transport. Not so Ezeiza, which is considered to have bad connections (there is only one bus line and no trains) while taxi, Uber or Cabify would cost at least 1,000 pesos, almost as much as the passenger fare for some of the low-cost airlines.

Aerolíneas Argentinas can also count on state assistance, meaning it remains safe. The state carrier has received government help to the tune of US$5.8 billion between its nationalisation in 2008 and last year, according to chequeado.com.