Argentina is set to liberalize its air travel market. The Milei government, which was elected in November 2023 on a platform promising to enact thorough economic reforms in the country, is moving ahead with plans previously outlined in December 2023 to change the legal framework that regulates Argentinian commercial aviation.
On July 10, 2024, the government issued decree “599/2024”, which contains a broad-ranging package of measures aimed at cutting red tape in the industry.
Argentina is making it easier for foreign airlines to set up operations in the country and it will also liberalize the number of routes and frequencies that carriers can operate, only subject to governmental nod of approval.
Under the new regulations, foreign carriers could, subject to some conditions, also enter the Argentinian domestic market. In this regard, industry observers have pointed out that carriers from Brazil, Chile, Perú, Ecuador, Panama, Uruguay, and Canada could, in theory, benefit from this possibility due to the bilateral agreements Argentina has signed with these countries.
Ahead of the expected approval of these measures, one Chilean airline, Sky Airlines, already announced its intention to operate domestic flights within Argentina.
Crucially, the decree is also scrapping pricing limitations. Airlines will now be free to set up fares without the minimum price threshold that previously existed, which was widely regarded as hampering the development of a proper low-cost airline industry.
Other measures are aimed at airport ramp services, which will also be liberalized, and the small air operator, which from now on will be able to offer commercial services under a specific regulatory regime. The latter measure is expected to incentivize the development of a domestic regional air travel industry and boost the connectivity between smaller airports.
The new decree represents a tectonic shift in the market playing field. However, the government’s next actions regarding the national flag carrier, Aerolíneas Argentinas, which, as of H1 2024 has a market share of over 60%, are still not known.
During this electoral campaign, President Javier Milei promised to privatize the airline or sell it to its workers for a symbolic amount.
Although chronically loss-making, Aerolíneas Argentinas unexpectedly managed to close the fiscal year 2023 with a US$32 million profit.