Air Transport World

Chile at center stage - again. (open-skies policy in danger)

SANTIAGO-Chile was the first Latin American country to adopt an "open skies" policy, the first to taste the sweet fruits of this neoliberal approach and the first to proudly throw its airline into open-field commercial battle against powerful international competitors. Now, its is the first to savor the bitter stone that sometimes hides within these fruits.

What began in 1979 when, beefed up under the influence of scholars from the University of Chicago, the government took the national economy toward a neoliberal approach (ATW, 6/90), started to sour last year, then broke into a political/commercial fight this year that could lead to changes in the free-for-all market. On one side are LanChile and Ladeco. American Airlines and Pan Am are on the other, with a fare war and possible denunciation of the U.S.-Chile bilateral agreement in between.

In 1979, the Chilean air-transport industry was deregulated. Freedom of entry and frequencies, freedom of fares and low-key governmental interference became the norms. Ten years later, the same basic framework led to two other innovations that started to call attention to Chile as a pioneering country in the region: It partially privatized its flag carrier, LanChile-allowing 30% of the capital to be sold to SAS-and signed-actually, almost signed-a flexible bilateral agreement with the U.S., the country's major international partner in terms of air traffic.

What came out of all this push into a daring new era-shaping drive, in Latin American terms can be expressed better in figures than in words.

Taking international passenger traffic as an example and considering the 1981-90 period, Chilean carriers' passenger boardings jumped 49%, from 326,391 to 489,272. LanChile started the decade recording 1.383 billion RPKs on international services and closed it by recording an 18% increase to 1.633 billion. Ladeco was even more impressive. International RPKs jumped from 121 million to 467 million, a 28% increase. Passenger boardings by international airlines other than Chilean went up from 537,901 to 641,141, a 19% jump.

Chilean carriers also held a comfortable position in market share related to international-passenger traffic, inbound and outbound. Over all, they had a 30% market share in 1981 and 36% in 1990. European airlines, meanwhile, dropped from 31% to 24%. North American-one Canadian and five U.S. operators-also slipped, from 20% to 16%. Other-non-Chilean-South American carriers had an increase from 19% to 24%. …

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