dcajet
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Joined: Sun Aug 01, 2004 9:31 am

LATAM Argentina drops two cities from its domestic network

Wed Mar 07, 2018 11:30 pm

LATAM announced today that effective June 1st it will no longer fly to Bahia Blanca BHI and San Juan UAQ. The airline said the decision has been made solely on financial grounds: operating costs at those two airports outweigh revenues. 4M operates from AEP to BHI and from AEP and SCL to UAQ. This is the first time LATAM has dropped a route in Argentina; it appears the airline is getting rid of marginal stations as pressure from the competition (AR/AU/A0/F0/DN) intensifies. A 16th A320 is in Mexico City for overhaul and new livery applied and delivery to 4M.

Official notice from LATAM

LATAM Airlines Argentina
Información sobre la operación en Bahía Blanca y San Juan

Buenos Aires, 7 de marzo de 2018. – LATAM Airlines Argentina informa que, a partir del 1 de junio de 2018, cerrará de forma permanente sus bases en las ciudades de Bahía Blanca (Buenos Aires) y San Juan (provincia homónima). De tal manera, los vuelos desde y hacia esos destinos, tanto domésticos como regionales dejarán de operarse.

Esta decisión, la primera de estas características dentro de la extensa trayectoria de la Compañía en el país, apunta a garantizar la sustentabilidad de LATAM en el mercado doméstico local y obedece estrictamente al desbalance entre costos operativos e ingresos generados.

El cierre definitivo recae específicamente sobre San Juan y Bahía Blanca tras un exhaustivo análisis de los itinerarios, cantidad de frecuencias y factor de ocupación de estas rutas con respecto al resto de las operadas.

LATAM priorizará la fuente laboral de todos los empleados que hoy desempeñan tareas en las locaciones afectadas, buscando su relocalización en otras bases de la Compañía.

Todos los pasajeros que hayan adquirido tickets para volar a esos destinos luego del 31 de mayo de 2018, tendrán la posibilidad de realizar cambios de fecha y lugar, o solicitar la devolución del importe abonado.

LATAM Airlines Argentina ratifica su compromiso con la conectividad del país y de la región, así como con los más altos estándares en seguridad y calidad de servicio.
"Unattended children will be given espresso and a free kitten"
 
C010T3
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Re: LATAM Argentina drops two cities from its domestic network

Wed Mar 07, 2018 11:43 pm

I really don't understand why LATAM is not heavily investing in Argentina now that they are able to expand.
 
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PRGEC
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Re: LATAM Argentina drops two cities from its domestic network

Wed Mar 07, 2018 11:47 pm

C010T3 wrote:
I really don't understand why LATAM is not heavily investing in Argentina now that they are able to expand.


I have given up trying to understand most of LATAM's policies. Some of them sound like a terrible mistake...
Libertas quæ sera tamen
 
dcajet
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Re: LATAM Argentina drops two cities from its domestic network

Wed Mar 07, 2018 11:48 pm

And LATAM domestic fares in Argentina are the highest of all airlines. Interesting they drop BHI the moment Flybondi starts there.
"Unattended children will be given espresso and a free kitten"
 
Kashmon
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Re: LATAM Argentina drops two cities from its domestic network

Thu Mar 08, 2018 12:01 am

LATAM has the ability to dominate South America
but every decision they make , makes it seem like they want to downsize by 50% by 2025....
 
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PRGEC
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Re: LATAM Argentina drops two cities from its domestic network

Thu Mar 08, 2018 12:12 am

Kashmon wrote:
LATAM has the ability to dominate South America
but every decision they make , makes it seem like they want to downsize by 50% by 2025....


Well, at least in Brazil that's all they do nowadays: lose market share.
Libertas quæ sera tamen
 
ahj2000
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Re: LATAM Argentina drops two cities from its domestic network

Thu Mar 08, 2018 3:23 pm

PRGEC wrote:
Kashmon wrote:
LATAM has the ability to dominate South America
but every decision they make , makes it seem like they want to downsize by 50% by 2025....


Well, at least in Brazil that's all they do nowadays: lose market share.

They are losing market share in the traditional strongholds of Perú and Chile as well. I cannot understand most of LA’s decisions, from the Euro-style short haul when their competitor doubles down on domestic business, the strange route changes, and the decision to seemingly shrink at The same time their competitors are growing like weeds.
-Andrés Juánez
 
dcajet
Topic Author
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Re: LATAM Argentina drops two cities from its domestic network

Fri Mar 09, 2018 1:55 am

And while not confirmed, sources from inside LATAM mention that one or two more stations may be closed in the coming months, one of them possibly being Rio Gallegos (RGL) in Patagonia.

It is understandable that with the LIM & GRU hubs a few hours away (and SCL to a lesser extent), 4M will always be second fiddle in the LATAM ensemble. Yet, it is odd that while the domestic market in Argentina is expanding and they have no impediments (legal or commercial) to grow, LATAM chooses to reduce itself in the Argentina domestic market.
"Unattended children will be given espresso and a free kitten"
 
incitatus
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Re: LATAM Argentina drops two cities from its domestic network

Fri Mar 09, 2018 2:08 am

If everything we read about airlines adding capacity in Argentina is true, there will be no money to be made in air travel there for a long time. It doesn't matter how much of a boom the economy goes through, the market simply can't absorb the amount of capacity that is being talked about by new entrants. It is only rational for LATAM to focus on the Latin markets that can turn a profit, and let the new entrants self-destruct.
I do not consume Murdoch products including the Wall Street Journal
 
MaverickM11
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Re: LATAM Argentina drops two cities from its domestic network

Fri Mar 09, 2018 2:13 am

Could it be they are dropping two unprofitable destinations to focus those ASKs on more profitable existing destinations, or perhaps new ones?

ahj2000 wrote:
They are losing market share in the traditional strongholds of Perú and Chile as well. I cannot understand most of LA’s decisions, from the Euro-style short haul when their competitor doubles down on domestic business, the strange route changes, and the decision to seemingly shrink at The same time their competitors are growing like weeds.

Someone is doubling down on short haul domestic business class? That someone has their bad idea jeans on.
E pur si muove -Galileo
 
MalevTU134
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Re: LATAM Argentina drops two cities from its domestic network

Fri Mar 09, 2018 3:08 am

incitatus wrote:
If everything we read about airlines adding capacity in Argentina is true, there will be no money to be made in air travel there for a long time. It doesn't matter how much of a boom the economy goes through, the market simply can't absorb the amount of capacity that is being talked about by new entrants. It is only rational for LATAM to focus on the Latin markets that can turn a profit, and let the new entrants self-destruct.

Exactly. And furthermore, LATAM, being a (partly) Chilean airline, know very well the intricacies of the roller coaster ride that is and has been the Argentinean economy for the last 70 years. Chile has, after all, had a first row ticket to this novela during all this time. They know fully well that the economy will implode upon itself in the next 2-4 years, just about when major investments would start to pay off. That, combined with the high operating costs (for the region) and the upcoming blood bath due to the onslaught of LCCs with more or less suicidal business plans, makes me think that it is not entirely unwise of LATAM to allocate its resources elsewhere for the time being.
 
jmmadrid
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Re: LATAM Argentina drops two cities from its domestic network

Fri Mar 09, 2018 8:38 am

MalevTU134 wrote:
That, combined with the high operating costs (for the region) and the upcoming blood bath due to the onslaught of LCCs with more or less suicidal business plans, makes me think that it is not entirely unwise of LATAM to allocate its resources elsewhere for the time being.


Could it be that LATAM managers are reading the same books than their colleagues from British Airways and Iberia? Forget about market share, impressive route maps, continuous expansion and airline size and focus on short term profitability instead?
 
dcajet
Topic Author
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Re: LATAM Argentina drops two cities from its domestic network

Fri Mar 09, 2018 4:47 pm

MalevTU134 wrote:
Exactly. And furthermore, LATAM, being a (partly) Chilean airline, know very well the intricacies of the roller coaster ride that is and has been the Argentinean economy for the last 70 years. Chile has, after all, had a first row ticket to this novela during all this time. They know fully well that the economy will implode upon itself in the next 2-4 years, just about when major investments would start to pay off. That, combined with the high operating costs (for the region) and the upcoming blood bath due to the onslaught of LCCs with more or less suicidal business plans, makes me think that it is not entirely unwise of LATAM to allocate its resources elsewhere for the time being.


A tad of schadenfreude in your comment perhaps? While no one disputes the less than stellar past performance of the Argentinian economy, I beg to differ about (do you read tea leaves?) the impending implosion of the economy in 2-4 years. Simply because Argentina is not experiencing any economic boom. The economy is growing at the rate it needs to grow (~3%) to make growth sustainable. Inflation continues to be an issue.

There is, however, a boom in the air transportation sector: The Macri administration has not done anything groundbreaking in this area by any means: just level the playing field, provide fair and clear rules for every player and let the market play itself out. Combine that with a market where air transportation (due to past protectionist policies) had been stunted in its growth, and you have today's boom. Bus transportation is declining by 30% to 50% in some parts of the country. It is from there that growth is coming to the airline sector. They are not killing each other over market share. There is plenty of room for growth.

LATAM? It is not allocating resources to any other countries; in fact, it is adding a 16th A320 to the 4M fleet and it just added another 767-300 to increase flights to Miami. These two routes that are being cancelled are, for LATAM's network, marginal at best, UAQ was only served via MDZ until recently. BHI had already been suspended once during CFK's government. The real reason behind this decision is only known to LATAM, but. to me, they are clearly focusing on short term profitability as they continue to shake off a few horrible years - and they are not out of the woods yet. This decision needs to be seen in the context of LATAM as a whole, and not just one of its franchisees.
"Unattended children will be given espresso and a free kitten"
 
ahj2000
Posts: 1143
Joined: Wed Nov 26, 2014 5:34 pm

Re: LATAM Argentina drops two cities from its domestic network

Fri Mar 09, 2018 5:57 pm

MaverickM11 wrote:
Could it be they are dropping two unprofitable destinations to focus those ASKs on more profitable existing destinations, or perhaps new ones?

ahj2000 wrote:
They are losing market share in the traditional strongholds of Perú and Chile as well. I cannot understand most of LA’s decisions, from the Euro-style short haul when their competitor doubles down on domestic business, the strange route changes, and the decision to seemingly shrink at The same time their competitors are growing like weeds.

Someone is doubling down on short haul domestic business class? That someone has their bad idea jeans on.

Avianca has J on all jet aircraft now. (Excluding O6)
-Andrés Juánez
 
RCS763AV
Posts: 3750
Joined: Mon Jun 14, 2004 1:22 am

Re: LATAM Argentina drops two cities from its domestic network

Sat Mar 10, 2018 1:40 am

ahj2000 wrote:
PRGEC wrote:
Kashmon wrote:
LATAM has the ability to dominate South America
but every decision they make , makes it seem like they want to downsize by 50% by 2025....


Well, at least in Brazil that's all they do nowadays: lose market share.

They are losing market share in the traditional strongholds of Perú and Chile as well. I cannot understand most of LA’s decisions, from the Euro-style short haul when their competitor doubles down on domestic business, the strange route changes, and the decision to seemingly shrink at The same time their competitors are growing like weeds.


Remember how LATAM was bleeding money because of excess capacity especially in Brazil? They are focusing on profitability now. They have also cut some routes in Colombia and added some others (like CLO-MDE which was axed in favor of adding more point-to-point capacity to ADZ), they're figuring out what makes the most money for them. When they figure out how to grow profitable again, believe me they will be coming for everyone.

Avianca does not have business in all of its jet aircraft because it thinks having J cabins on 30 minute BOG-MDE hops is profitable. Most people riding domestic J are award tickets or status upgrades. Avianca has J in all its jet aircraft because unlike LA, Avianca flies medium-haul sectors on narrow body aircraft mainly due to the location of BOG and SAL (think BOG-MVD or SAL-SFO). It's the same reason CM has J on all its 737s.

LA's model sees wide body aircraft on 90% of international sectors that are over 3 hours. There are some exceptions, like LIM-MCO, which I bet are nightmarish to premium travelers. For the rest its still the same story.

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