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Airline price increases authorized by government

Matthew Cowley  Nov 17, 2009

BUENOS AIRES - Argentina's government Tuesday authorized rate increases for domestic airline tickets, saying it was protecting the financial viability of carriers.

The measure, which will become effective Wednesday morning, "was taken after analyzing...the components which make up the costs of airline tickets," the Transport Department said in a statement.

The new prices are "close to the point of economic equilibrium," which will lead to a "substantial improvement" in airline finances, it said in the resolution published in the official gazette.

Local newspapers suggested the increases would be for up to 20% on some routes.

Just as it has done in a number of other sectors of the economy, the government secured emergency powers over the airline industry in the wake of the 2001-2002 economic crisis. Those powers were extended in 2006.

It has used the powers to keep prices artificially low. In some cases, airline tickets had become cheaper than those for buses.

Although the hikes will help all airlines flying within Argentina, it will undoubtedly bring some relief to the state airline, Aerolineas Argentinas, which has been posting consistent losses for a number of months.

Aside from Aerolineas and its operating subsidiary Austral, there's one other government-run airline operating in the local market, Lineas Aereas del Estado, or LADE. There are three private-sector operators, of which the local unit of Chile's LAN is the most significant, along with two smaller operations, SOL S.A. Lineas Aereas and Aerovip.

Airline price increases authorized by government
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Source: Dow Jones Newswires

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