Daily Memo: Argentina’s Airlines See Plenty Of Upside In Pandemic Recovery

Prior to the pandemic, Argentina’s aviation sector was in transition as the country’s start-up LCCs worked to establish themselves in a market that was beginning to liberalize. 

Now with two ULCCs—Flybondi and JetSMART Argentina—and flag carrier Aerolineas Argentinas, it appears a modicum of rationality has taken hold in the market as Argentina’s air traffic recovery continues. 

In 2015, the stage was set for low-cost operators to make their market debut when the country’s then-president Mauricio Macri began to adopt more liberal air transport sector policies. Macri’s administration removed Argentina’s long-standing airfare floor in 2018 and allowed international operators to serve secondary markets. 

Argentina’s first ULCC Flybondi made its debut in July 2018, followed by Norwegian Air Argentina in October 2018. JetSMART Argentina entered the market in April 2019. 

In late 2019 Norwegian Air Argentina decided to exit the market and sold its operations to JetSMART Argentina. Norwegian exited the market just before the coronavirus pandemic, and during the crisis LATAM Airlines Argentina, which at one time had been the country’s second-largest domestic airline, also ceased operations. 

Now, after some level of consolidation in the market, both of Argentina’s ULCCs are growing at a steady pace. 

Flybondi recently took delivery of its 12th Boeing 737-800 and said it is searching for five additional aircraft. The company has projected a turnover of $500 million for 2023.

Data from Argentina’s civil aviation agency ANAC show that in February, Flybondi’s domestic passenger share jumped seven points year-over-year to 21%. JetSMART’s share grew by one point year-over-year to 15% and Aerolineas Argentinas’ share fell by eight points to 63%. 

Flybondi has estimated that 20% of its customers are traveling by air for the first time. The airline transported roughly 2.3 million passengers (domestic and international) in 2022 compared with 1.5 million in 2019. 

The airline’s capacity deployment for the week of March 13, measured by available seat kilometers, is up 63% YOY, according to Aviation Week’s CAPA. JetSMART Argentina’s capacity has grown 34%. The ULCC operates a fleet of Airbus A320ceos. Aviation Week Network’s Fleet Discovery shows the airline has seven aircraft in service and one in storage. 

Aerolineas Argentinas’ capacity has risen by 23% compared with 2022, according to CAPA. 

Flybondi and JetSMART are obviously growing from a smaller base than Argentina’s flag carrier. Aerolinas Argentinas has 66 aircraft in service, one parked/in reserve, five parked and seven in storage, according to Fleet Discovery. The airline also accounts for 68% of Argentina’s domestic capacity, compared with 18.5% for Flybondi and 14% for JetSMART Argentina. 

Aerolineas Argentinas also remains bullish about Argentina’s air transport market. The airline recently said its domestic operations in January were 11% higher than prior to the pandemic, and the company continues to rebuild its international network, such as increasing its frequencies from Buenos Aires to Madrid and Rome in July. Argentina’s international traffic is still rebounding as ANAC data show the country’s international passenger levels in 2022 were 8 million compared with 14 million in 2019. 

At the moment, it doesn’t appear the growth plans of Argentina’s airlines will trigger a supply-demand imbalance. During the second half of 2022, both Aerolineas Argentinas and Flybondi concluded that domestic demand was exceeding supply. 

Overall, Argentina’s market composition is now similar to Mexico, where there are also two strong ULCCs—Volaris and Viva Aerobus—and a larger, full-service flag carrier Aeromexico. And at least for now, it seems a certain level of stability remains intact in each marketplace.