Industry-level arguments are at play in Argentina as aviation strives to support the country’s development

Air transport is in the spotlight in Argentina. Challenges facing the industry have created priority targets that include improving safety, developing quality, cost-efficient infrastructure, and reducing charges and taxation.

A new government, led by President Mauricio Macri and featuring Guillermo Dietrich as the Transportation Minister, is at least taking a supportive stance, the interest in the industry no doubt piqued by some robust figures. Aviation is worth $9.6 billion to Argentine GDP and supports 370,000 jobs. Demand is strong with traffic set to rise at 5.2% per year through 2020.

“There has not really been any aviation dialogue in the country for 14 years,” says Peter Cerda, IATA’s Regional Vice President for the Americas. “That has changed with the new administration that came into power in late 2015. Their agenda looks to open-up opportunities for aviation to play a key role in Argentina’s development.  With the right policy infrastructure Argentina has the potential to be a shining example of the good aviation can do.”

 

Plans into action

Safety issues in ground handling top the priority list. IATA has proposed the creation of a National Argentine Aviation Safety Group that will look at ground issues as part of its remit. This has been recommended by ICAO with similar entities already established in the region, including in Brazil and Costa Rica.

Monopolistic ground services provider, Intercargo, also needs to regain its ISAGO (IATA Safety Audit for Ground Operations) certification, which lapsed in 2013. Cerda believes that competition would make the company “safer and more efficient.”

At least Intercargo is a willing participant in positive discussions. Already, the company has reduced it charges 5% and a further 5% drop is due to come into effect at the end of 2016.

Safety will be further enhanced by improvements in airport infrastructure. Argentine gateways are benefitting from ORSNA’s (the airports operator) 2016–2019 $900 million master plan. This calls for improvements at 14 airports, including Aeroparque Jorge Newbery (AEP) and Ministro Pistarini International Airport (EZE) in Buenos Aires.

The biggest challenge in airport terms, however, is cross-subsidization. ORSNA admits to the practice even though this is against ICAO principles in setting charges. In essence, the EZE charge pays for developments at other airports but, of course, there are many airlines serving EZE that don’t go anywhere else in Argentina.

Although negotiations are ongoing, when looked at in conjunction with the international passenger fee, EZE becomes really expensive. And recently that international passenger fee increased 30% to $57 per passenger. In contrast, the domestic passenger fee is just $4.

Analysis shows huge potential gains for both the consumer and the Argentine economy if the taxes and charges burden was removed. The economy, for example, would be more than $30 billion better off, according to SEO Analysis.

“Unfortunately charges policies like this hurt travel, inhibit economic development, and hinder airline expansion,” says Cerda.

 

Parallel development

Airspace needs to mimic airport improvements. ANAC, Argentina’s civil aviation authority, has created a performance-based navigation (PBN) implementation team and experts are being trained in procedure design (PANS-OPS). There is a need to expedite the process, however, especially in the skies above Buenos Aires. The Argentine capital’s location means the work must also be coordinated with Uruguay and Brazil to be truly effective.

Responsibility for the projects falls to the newly created EANA, a civil entity that has recently taken over air traffic control from the military. IATA is calling for EANA to not only speed up technology enhancements but also to allow an airline representative on its consulting committee.

“There is an opportunity to put Argentina on the map in regional terms and in global terms,” he adds. “It is a great country. There are issues to resolve, but the stakeholders are having positive discussions. Aviation is finally on the agenda of the Argentine government and there is no doubt that there can be a win-win relationship between the government and the industry.”

 

 

 

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