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New President of Argentina To Implement “Open Skies” Policy

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Argentina’s President, Javier Gerardo Milei, assumed office on December 10, 2023, marking the beginning of his presidency. Since then, President Milei has garnered attention for his proposed reforms in the aviation sector. In late November, shortly after his election, he unveiled a plan to privatize the national flag carrier, Aerolineas Argentinas, with the unique approach of distributing shares among the airline’s employees.

Subsequently, on December 20, President Milei introduced a comprehensive set of proposals during a national broadcast, aiming to deregulate various aspects of the government, particularly focusing on aviation. Among the notable announcements was the proposal for an open skies policy, designed to bring about significant changes in the Argentinian economy.

According to Milei, these reforms are part of a larger initiative, encompassing more than 300 changes, intended to reconstruct the nation, restore individual freedoms and autonomy, and dismantle the plethora of regulations impeding economic growth.

The open skies policy, a key component of this initiative, would permit any foreign entity to operate flights within Argentinian airspace, encompassing both domestic and international routes. However, stringent criteria, including demonstrating technical and financial solvency, would be imposed on all airlines seeking to operate in Argentina. The overarching goal is to boost the country’s economy, foster increased airline competition, and potentially lower travel costs, thereby stimulating economic growth.

Critics, however, express concerns that such liberalization may adversely affect Argentina’s flagship carrier, Aerolineas Argentinas. They argue that increased competition might compromise the growth and viability of the national airline.

President Milei’s broadcast also outlined measures to facilitate the privatization of Aerolineas Argentinas, including the repeal of regulations hindering the privatization of public companies and the state-owned companies’ regime. Despite the airline’s positive financial results in the first half of 2023, posting its best performance in over fifteen years with nearly $50 million in losses, the privatization process appears imminent.

Once privatized, significant structural changes are anticipated for Aerolineas Argentinas, with a renewed focus on profitability. This may involve streamlining operations to concentrate on lucrative routes, potentially leading to the discontinuation of less profitable regional routes.