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Fallout As Argentina Seizes Hangar Belonging To LAN, Part Of LATAM Group, At Buenos Aires Airport

posted 23 Aug 2013, 03:07 by Mpelembe   [ updated 23 Aug 2013, 03:08 ]

Public officials, business leaders and passengers voice concern over Argentina's plans to seize a LAN hangar at a major Argentine airport essentially shutting down domestic flights from the airport.

 BUENOS AIRESARGENTINA (AUGUST 22, 2013) (REUTERS) -  Airline passengers and public officials in Argentina and Chile have voiced their concerns as Argentina plans to seize a hangar belonging to Chilean based LAN airlines in a key Buenos Aires airport.

The Argentine airport regulator ORSNA has given LAN Argentina until the end of the month to turn over its hangar at Buenos Aires' Aeroparque Jorge Newbery airport, a major domestic airport with limited international flights.

LAN maintains a dozen Airbus A320s which fly on 14 domestic routes in the country at the hangar.

The airline has said the demand threatens its operations in Argentina, sparking warnings from an airport workers' union that the regulators were endangering jobs.

The confusion over the sudden move also has airline travellers concerned over their choices when flying.

"According to what I heard, they will shut everything down in 10 days. But it would be nice if they could sit down and negotiate so that they (LAN) could remain," LAN passenger Sabrina Rodriguez said.

LAN Argentina, a subsidiary of the larger LATAM group based in Chile, is the main competitor within the country to state-owned Aerolineas Argentinas.

"I think it is an unnecessary conflict. I think as a passenger the best thing is to have choices and the more companies there are, the more choices the passenger has. And to be captive to a monopolistic practice, truthfully, that doesn't sound very good to me as a passenger," another passenger, Pablo Roij said.

Interventionist policies have flourished under Argentine leader Cristina Fernandez, frustrating many businesses operating in the South American country.

Buenos Aires Mayor Mauricio Macri, an outspoken critic and opponent of Fernandez, said the administration should concentrate on strengthening Aerolineas Argentinas which was nationalized in 2008.

"The poor performance of Aerolineas [Argentinas] is like trying to block out the sun with your hand and they think that by hurting LAN it will benefit Aerolineas [Argentinas]. What they need to do is strengthen Aerolineas [Argentinas]," Macri said.

LATAM has said the demand to leave the hangar is the latest action in increased actions against the company's operations in the South American country.

Businessman Eduardo Eurnekian, whose Grupo Corporacion America controls Aeropuertos Argentina 2000 which runs 33 Argentine airports including Aeroparque, said the government is not outside its authority, but said there is a better way to go about seizing the hangar.

"The government has the right to ask them to leave whatever airport to concentrate their activities in another one, but they have to negotiate it in a rational way," Eurnekian said.

The move has also been strongly criticized by neighbouring Chile where LATAM is based.

Chilean Foreign Minister Alfredo Moreno on Wednesday (August 21) said there was reason for concern.

"Our country completely respects the Argentine legal framework, but our worry is, like with all other Chilean companies that operate in other countries, that there be no arbitrary discrimination just because there is foreign capital, in this case Chilean capital. This is our concern. And this is why we have contacted the Argentine authorities," Moreno said.

The dispute has triggered a flurry of diplomatic activity between Argentina and neighbouring Chile, home of the airline's major shareholders, which once included Chilean President Sebastian Pinera.

The regulatory tangle in Argentina is seen as another headwind for LATAM, as a stronger dollar and weaker air traffic in Brazil have battered the profitability of its operations.