CAPA reported in late 2012 that the group’s fleet plan envisioned 60 narrowbody aircraft by the end of 2016, including 22 E190s and 38 737NGs. The new order will drive even faster narrowbody growth, with a fleet of up to 74 narrowbodies including 52 737NGs and 22 E190s.

Aerolineas has come a long way since re-nationalisation and the new narrowbody order further signals its intention to grow and have a modern and reliable operation with a respectable product and high standards. Aerolineas is not yet profitable but it is now better positioned to compete. With Aerolineas in an improved state it is time for the government to drop its protective policies and start opening up the market to the benefit of Argentina’s consumers.

Having some short-haul feed also benefits SkyTeam partners. Aerolineas joined SkyTeam in Aug-2012 and has since been working on implementing codeshares with several members. Mr Recalde says Aerolineas has benefitted from SkyTeam membership internally, as joining the alliance has raised the carrier’s standards and confidence, and has provided added value to its customers.

Over the same time period, LAN Argentina’s domestic capacity has been flat. The carrier currently offers about 73,000 weekly domestic seats. For 2Q2013, LAN Argentina parent LATAM reported only 3% ASK growth for its domestic Argentinean operation.

Aerolineas currently accounts for about two-thirds of total capacity in Argentina’s domestic market, according to CAPA and Innovata data. LAN Argentina accounts for about 30% and small regional carriers account for the remaining 4% to 5%. Aerolineas and LAN are the only competitors on trunk routes.

The flag carrier has incurred stiff losses since renationalisation despite trying to improve its position through network adjustments, fleet renewal and new partnerships including membership of SkyTeam. Aerolineas continues to work on improving its highly unprofitable long-haul operation but the carrier is now primarily focusing growth in the domestic and – to a lesser extent – the regional international sectors.

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