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Transportation in Argentina

Argentina transportation market: Aerolineas Argentinas the leading player with 63% of value sales

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2014-03-25 16:15:04 - Transportation in Argentina - a new market research report on

Aerolineas Argentinas leads the Argentina air transportation market with a stable 63% of value sales as a consequence of federal government regulation of the market. It accounted for 68% of schedule airline value sales in 2012 and 42% of charter value sales, charter being an area it entered in 2009.

During 2012, the Transportation Office authorised three air tariff increases: in February (30% average increase), in June (30% average) and in November (20% average). In February, additionally to the price increase, the Transportation Office changed its pricing policy. Until 2011, there was a minimum price and a maximum price per route, which means that there was a price range for airlines to offer. Since February 2012, there is a minimum price



and two maximum prices depending on when the ticket is bought (a tariff to buy tickets with less than10 days in advance and a tariff to buy tickets with more than 10 days in advance). This change in pricing policy has impacted price increases.

The federal government tried to justify air tariff increases with fuel oil price growth in the same period but, according to trade press, fuel oil for a Jet A1 in Argentina cost US$0.7995/cubic metre in February 2012, one of the most low prices in the region as in Peru it cost US$0.8863 and in Chile it cost US$0.8949. Meanwhile, the one to most benefit from air tariff increases was Aerolineas Argentinas, the nationalised company that accounted for 63% of the market value in 2012.

High inflation rates are expected to continue negatively affecting transportation tariffs with growing prices and lower service levels during the forecast period. Besides, years of subsidies to transportation, which ended in 2012 as a consequence of federal government´s need to cut public expenses, would lead to tariff adjustments during the period under analysis following increasing labour costs, growing fuel oil costs and other operational costs in bus companies and airlines.

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