Argentina is backtracking on its promise to privatise Lafsa, its new state-owned airline, six months after its start. The sale of LAFSA, according to government documents, has been put off for at least a year.
This has major implications for Aerolineas Argentinas and Southern Winds, and could frustrate LanChile's hope of entering the domestic Argentinian market. Government officials are offering no explanation, but observers say the process of launching LAFSA is lagging so far behind that a decision to delay its sale was inevitable.
What is less clear is why the government has not given LAFSA's start-up a higher priority. LAFSA has made little progress in obtaining an operating certificate, opening offices, negotiating employment contracts, or in fleet planning. Instead, Buenos Aires simply pays the salaries of the former LAPA and Dinar staff who now nominally work for LAFSA, and still pays Southern Winds $1 million a month to operate LAFSA's routes. Buenos Aires has allocated $29 million this year for LAFSA operations, but it is unclear how much of this is earmarked to launch it as a standalone airline.
Aerolineas continues to criticise LAFSA as a pretext for providing a subsidy to Southern Winds. This carrier now offers the only domestic competition to Aerolineas, and the government has vowed to block Aerolineas from enlarging its 82% marketshare. Southern Winds has survived the economic crisis that killed LAPA and Dinar, but some observers believe it still needs state help. Indeed, they question whether the government will ever launch or sell LAFSA.
This is not good news for LanChile, whose Lan Argentina scenario looks less likely now with the postponement of LAFSA's sale.
Source: Airline Business
