The Reverse Kingdom: Argentina′s aerospace disaster

By Jonathan Norman

In 1963 on of the most renowned poets of Argentina Maria Elena Walsh, wrote one of her most popular kids songs called the Reverse Kingdom, which said something like ¨… they told me that in the reverse kingdom the birds swim, and the fish flies, that cats don′t meow and say yes because they study a lot of English…¨ of course this rhymes very well in Spanish.

What I realized over the years is that the poem really describes Argentinean idiosyncrasy and way of doing things. Aerospace industry in Argentina is no exemption to this example.

For more than 80 years the national airline Aerolineas Argentina has been posting negative balance sheets and turned into the best example of everything you can do wrong in an airline. Flooded with corrupt employees, unions are more concerned on political agendas, rather than fighting for employee’s rights and benefits. The airline has become a commodity for governments to return favors to voters and party contributors by assigning jobs to unskilled workers.

When you add to this formula a centralized 44 million people country where anything and everything goes through Buenos Aires (Capital City) like the rest of the country doesn′t exist, and you add the poorest air network planning in the world, you end with probably the most wasted aerospace industry business in the planet.

With almost 4 million people, with an average GDP per capita of less than 6000USD; Buenos Aires has a private airport management monopoly with Aeropuertos Argentina 2000 (owned by Corporacion America) operating 3 airports just for the city of Buenos Aires, in an egocentric attempted imitation of New York, London, or Sao Paulo.

The main airport Ezeiza International barely makes the 10 million passenger traffic threshold a year and it’s probably at less than 50% of total capacity making it a Tier3 international terminal. At the same time Jorge Newberry Regional Airport is located in the heart of the city with the same traffic than Ezeiza, but at a much higher occupation rate. Even though turnaround procedures for aircrafts are almost doubled in time than the usual industry standard, net utilization is probably one of the worst in the planet.

Thirdly, the El Palomar airport located on the north west outskirts of the city was opened a couple of years ago just for the only purpose of running a very small low cost operation because Aerolineas Argentina (national airline) wanted to maintain their monopolical position at the Jorge Newbery Airport and wouldn′t allow more competition to enter the facility.

Who benefits from this decision? Aerolineas Argentinas corporate and union’s agenda who answers to the governing party. Who loses with this decision? The Argentinean citizens.

While hydrants at Ezeiza International Airport don′t have fuel to feed flights, and ground handling services at all airports are provided by an inefficient public company InterCargo runned by a corrupt leftist union, the regional airport Jorge Newberry is currently developing a majestic expansion plan of Asian proportions where they gained land from the River Plate adjacent to the airport. Gain land in a country that is well under populated, where land is abundant, and with an International Airport operating at half capacity only 20 miles apart. It rises some eyebrows to say the least...

On 2020 LATAM group announced they were exiting the Argentinean market, because they couldn′t achieve profit in more than 12 years of operations. Even though the LATAM group achieved profitability in every other market of South America until Covid19 happened. Who benefited from this decision? Aerolineas Argentinas corporate and union′s agenda who answers to the governing party. Who loses with this decision? The Argentinean citizens.

Last but not least, in the last 6 months airlines such as Emirates, Ethiad, Air New Zealand, and Norwegian halted operations and removed Buenos Aires as a destination. Why? Their financial restrictions on currency exchange, inefficient operations, and covid19 make Buenos Aires a profitless point in their networks. This severe loss in business will make Ezeiza International further drop their traffic numbers below 6 million passengers a year becoming a Tier4 airport. Quite a negative achievement considering it’s the main international hub for 40 million people and one of the three biggest economies in South America.

So, after all this ill decisions and chaos where political interests and corruption runs the industry agenda, what is the primary measures which needs to be taken to eventually have a chance down the line?

1.     Agglomerate all operations into one major hub in Buenos Aires (Ezeiza Intl), and fund a well-run high speed train system from the city directly into the airport. Selling the land from the regional airport will give enough funds to finance a well-developed train system and expand main airport capacity at Ezeiza Intl.

2.     Unplug Aerolineas Argentinas from government funding and let them run their business on a free market basis with no special benefits (follow Ethiopian Airlines example). I forecast bankruptcy in less than 5 years. After that, offer slots and routes to best private bidders.

3.     Open Argentina skies to the world, and promote air network integration with the rest of the nation. Profitable Focus City service for privately runned airlines could be achieved in Mendoza, Cordoba, Rosario, and Bariloche.

4.     Promote feeder airlines model based on turboprop operations to connect secondary cities, and provide adequate service to the greater Buenos Aires province.

5.     Establish agreements with major airlines in Brazil to promote tourism and point to point operations between primary Brazilian cities and Argentina, without making them stop in Buenos Aires

6.     Privatize all ground handling operations or open the market for new participants

If implemented correctly with the support and auditing of IATA and ICAO, Argentina could become one of the fastest growing markets in less than 5 years. Why?

-         Buenos Aires is one of the top 3 cities in the continent

-         Buenos Aires is a world renowned metropolis with a huge cultural value for tourism

-         Argentina has the biggest sky resorts centers and destinations south of the equator (Bariloche, San Martin de los Andes, Mendoza, Ushuaia, Chapelco)

-         Many UNESCO sites including one World Natural Wonder (Iguazú, Jujuy, El Calafate, Ushuaia, Buenos Aires)

-         Big domestic market with secondary cities above 1 million habitants (Cordoba, Mendoza, Rosario)

-         All weathers all year long (Desert, Mountains, Tundra, Jungle, Plains)

-         Top 5 Wine producer in the World (Mendoza)

-         Top 3 Grain producer in the World

-         Big Gas & Oil Market (Neuquén), and Lithium (Jujuy)

-         Main Gateway for European tourism and connections from South America to the World

Hopefully at some point we will see a turnover and Argentina can go back to be what it once was, but even better, become the premier destination and business center in South America. Until then, they are still the REVERSE KINGDOM.