Argentina recently elected Javier Milei as president. The ultra-libertarian is trying to take state involvement out of as many industries as possible. I’ve written about his plans to privatize Aerolineas Argentinas (or more accurately, to “hand it over” to employees). That’s not the only major aviation policy change he has in store, though…
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Argentina could fully open up to foreign airlines
Each country has its own aviation policy, which dictates what kind of flights airlines can operate, to, from, and within, that country. When it comes to international flights between countries, some governments have Open Skies policies (where unlimited service between select countries is permitted, subject to select requirements), while other governments have bilateral agreements (where the number of frequencies between countries is specifically negotiated, and could come with lots of stipulations).
As reported by Clarin, Argentina’s new president wants the country to basically lift all restrictions related to air treaties. This means that airlines from all countries could offer unlimited service not only to and from Argentina, but also within Argentina. That’s right, foreign carriers could start operating domestic routes within Argentina.
The only requirement for airlines to offer this kind of service would be them demonstrating “technical and financial solvency.”
Essentially lifting all restrictions on international airlines is a major move that’s more or less unprecedented. For example, the United States participates in an Open Skies treaty, whereby airlines from other countries participating in the treaty can offer unlimited service to the United States. However, we still maintain bilateral treaties with countries that aren’t part of that agreement, and don’t allow foreign airlines to operate domestic flights (at least not that they can sell tickets on point-to-point).
My take on Argentina opening up its skies
While I think the concept of handing over Aerolineas Argentinas to employees is ridiculous, I don’t necessarily think a country like Argentina adopting a full Open Skies policy is the dumbest idea ever. A few thoughts, both positive and negative:
- More air service to a country is generally good for the economy, and lifting the red tape on new service is ultimately a positive
- Historically the South American mega carriers (like Avianca and LATAM) needed to set up subsidiaries in each country where they wanted to have significant operations, so there’s something to be said for the simplicity of being able to add service without needing to deal with that bureaucracy
- I can’t imagine we’ll see that many other airlines suddenly serving domestic routes in Argentina — I don’t think Qatar Airways will be tempted by the prospect of hourly service from Buenos Aires to Cordoba, but I could be wrong 😉
- It’s interesting to basically “unleash” Aerolineas Argentinas and hand it over to employees while at the same time putting the airline in a much worse place competitively; it also makes it a lot less likely that another company would invest in Aerolineas Argentinas
- There’s not some amazing labor arbitrage opportunity here, like we’d see if foreign airlines were allowed to operate domestically in the United States
So we’ll see how this plays out, but given the state of Argentina’s economy, I don’t think this is the wildest idea ever. For example, LATAM Argentina ceased operations in 2020, so maybe an Open Skies policy to this extent would cause LATAM to once again add more service from Argentina… who knows. It’s definitely not good news for existing players, though.
Argentina’s new president plans to liberalize aviation restrictions in a major way. In addition to privatizing Aerolineas Argentinas, he essentially plans to lift all restrictions on new air service. Airlines from all countries would be allowed to offer unlimited service not only to and from Argentina, but also within Argentina. I’m curious to see how this plays out.
What do you make of Argentina’s planned Open Skies policy?