Argentina rolls out aviation reform in bid to bring in foreign airlines

By Kylie Madry

BUENOS AIRES (Reuters) - The Argentine government published a sweeping decree on Wednesday aimed at opening up the country's aviation sector, inviting foreign airlines to enter the market long dominated by state-run carrier Aerolineas Argentinas.

The reform should boost the number of routes, flight frequencies and bring in more competitors, the transportation secretariat said in a statement.

Carriers can now petition to operate as many routes and frequencies as they want, subject to safety approval, according to the decree.

Airlines also now have full control over how much they charge for tickets, the decree states, doing away with a dormant regulation which allowed the government to set a price floor.

The administration of libertarian President Javier Milei, who took office in December, has tied up a number of "open-skies agreements" with other countries in recent months, allowing their airlines to operate domestic routes in Argentina under some conditions.

Brazil, Chile, Peru, Ecuador, Panama, Uruguay and Canada have all signed agreements so far, potentially opening up the Argentine market to carriers from Gol to LATAM to Air Canada.

The transportation secretariat said on Wednesday that more such agreements should be signed in coming months.

Aerolineas Argentinas operated 62% of domestic flights in May, according to the most recent regulator data available. Trailing behind it were local low-cost airline Flybondi with 26% of the domestic market and Chilean carrier Jetsmart with 11%.

The state-run carrier's future remains uncertain as Milei has previously said he will privatize the airline. However, a bid to do so was scrapped from an omnibus reform bill passed by Congress last month.

Milei's spokesman, Manuel Adorni, said in an interview published last week by a local outlet that the government may try to make some state-run companies, such as Aerolineas, more profitable before looking to privatize them or seek out a buyer.

Last year, Aerolineas turned a $32 million net profit, according to the company.

Unions have heavily criticized the industry reforms, arguing that the government is hurting Aerolineas' operations and employees in order to bring in low-cost competitors.

Aerolineas has cut some frequencies and trimmed its workforce in recent months, according to the unions.

(Reporting by Kylie Madry;Editing by Elaine Hardcastle)