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How is the COVID-19 crisis affecting Argentine transportation, where the government allows the fall of private carriers (LATAM) and does everything in its power to break the ones that remain (Flybondi, JetSmart)? Meanwhile, it props up state-owned Aerolineas Argentinas, which is extremely inefficient and projected to lose more than $1 billion this year.
Air Transport World Editor-in-Chief Karen Walker responds:
Aviation in Argentina and across almost all of Latin America is in critical condition. Unlike governments in the U.S., Europe and many Asia-Pacific countries, most South American countries have provided little-to-no financial aid for airlines. As of mid-June, the total financial support for the region was a mere $300 million, compared with $66 billion in North America and $30 billion in Europe.
Latin American carriers are expected to post $4 billion in losses this year, according to the International Air Transport Association. Three major Latin American carriers are now in Chapter 11 bankruptcy protection: LATAM, Avianca and AeroMexico. Every day the crisis continues to erode the ability of the region’s airlines to recover and compete with their North American counterparts.
Argentina closed its borders in March and forbade the sale of any airline tickets. That will continue until at least Aug. 31. So Argentinian carriers are getting no support and are banned from raising revenue on future ticket sales.
Argentina is large and far away from many of the countries with which it needs to conduct trade and attract tourists. But thanks to its government, it could end up without domestic carriers and reliant on foreign airlines for international routes when the COVID-19 pandemic subsides.
On a more optimistic note, governments change regularly in Latin America. A new government might start to prioritize aviation once it realizes the harm to gross domestic product that is caused by not having healthy airlines and airports. So we may ultimately see new investment in startups, but the short-term outlook for Argentinian air transport is bleak.
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