Resolution 1654/2002 established a minimum price for domestic airfares. However, as of August 2018, Resolution 656/2018 has eliminated the minimum price with the aim of fostering the growth of new airlines in Argentina.
State of emergency for air transportation sector In the context of Argentina's political, economic and social crisis in 2001, the Executive declared a state of emergency for the air transportation sector and established tariff bands (Decree 1654/2002). This decree abrogated Ministry of Tourism, Culture and Sport Resolution 47/2001, which had established reference airfares that operators could increase or reduce by up to 35%. The context for this decision was a combination of local and international factors. At the national level, Argentine airlines were deeply affected by a depressed domestic market together with elevated costs because of currency devaluation. As a result, some companies went bankrupt, including Líneas Aéreas Privadas Argentinas. At the international level, 9/11 had a major impact on mandatory insurance for airlines and resulted in increased policy prices due to terrorist risks.
Decree 1012/2006 extended the state of emergency and updated the previous airfare tariff bands. The decree established reference airfares and maximum airfares I and II (which corresponded to tickets purchased 10 days before a domestic flight).
Cancellation of maximum airfares In 2016 the government eliminated maximum airfares to remedy a disparity in the aviation sector (Decree 294/2016). Fixing maximum airfares had hindered the establishment of commercial airline activity and by eliminating maximum airfares, passengers had more choice when choosing an airline. This measure also helped to strengthen and develop domestic air transportation.
Cancellation of minimum airfares In the context of deregulating the aviation sector and attracting low-cost carriers, the Ministry of Transportation recently issued Resolution 656/2018, which allows domestic carriers to charge any fare that they wish under certain circumstances.
Before this resolution, domestic carriers could charge no lower than the Civil Aviation Authority (ANAC) threshold.
Passengers can now acquire tickets without paying a minimum fare as long as they book their tickets at least 30 days before their journey.
As a result, air carriers have begun to offer low fares. However, the fact that most air carriers quote prices in US dollars and the exchange rate with Argentine pesos rises continually has been problematic.
There have been no changes to international fares. Airlines can continue to charge what they wish. The only obligation is to file the fares with the ANAC.
Ministry of Transportation Resolution 733/2018 established a commission to prepare a draft law to modify and update the Aeronautical Code.
Resolution 770/2018 transferred 20% of the total share capital of Intercargo (a ramp operator), currently under Ministry of Defence jurisdiction, to the Ministry of Transportation. Consequently, the Ministry of Transportation has become Intercargo's sole shareholder, as it already held 80% of the company's shares.
For further information on this topic please contact Elizabeth Mireya Freidenberg at Freidenberg Freidenberg & Lifsic by telephone (+54 11 4311 4991) or email ([email protected]).
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