New Argentinian President Milei was videotaped flying commercial – on state carrier Aerolineas Argentinas, which he has proposed to privatize turning ownership over to employees. Milei has also issued a decree opening Argentinian aviation up to foreign competition. Any world carrier would be able to fly to the country and also to engage in cabotage, flying domestic passengers within the country.
President Milei is welcomed by fellow passengers as he flies commercial to reduce government spending in Argentina.
— Visegrád 24 (@visegrad24) December 30, 2023
Aerolineas Argentinas has lost $8 billion of the government’s money since it was re-nationalized in 2008. Aerolineas Argentinas has been a basket case for decades. Pulling the plug on inefficient state enterprises is part of how Argentina can get inflation and de-growth under control. The country is facing 140% inflation and 5% negative GDP growth. Their economy is actually shrinking. Poverty has grown eight-fold in a decade. Just 5% of people lived in poverty in Argentina ten years ago, now 40% do.
This is a country that saw its peak a century ago and has largely been in decline under authoritarian leaders since then. That’s both why the people of Argentina have finally spoken up for something different, and why drastic policy changes are needed.
However the plan to open the country to airline competition only works if it survives being overturned by the legislature (which the President does not control) and being overturned by the courts. Until there’s clarity and stability there’s unlikely to be enough confidence on the part of airlines to invest in an Argentinian operation. And the economy needs to be turned around for those investments to turn profitable.
The Open Skies policy included in yesterday’s measures:
– Enables airline companies from all over the world to begin offering domestic flights within Argentine territory
– Enables airline companies from all over the world to offer international flights to and from Argentina… pic.twitter.com/E6aacEooKP— BowTiedMara (@BowTiedMara) December 21, 2023
There’s no world leader like Milei, an economics professor who explains clearly issues like trade – and whose strategy is to lay out common misconceptions and why they’re wrong in simple terms. He doesn’t just resort to slogans, he tries to educate. He’s also pretty entertaining and a wild persona.
Without private property, everything collapses.
About: Milei, Argentina, price signal, price system, private property, socialism, regulations. pic.twitter.com/jIakXTlKRx
— Milei Explains (@Milei_Explains) December 29, 2023
So far Milei seems pretty popular. He’s a serious thinker, but the challenges he faces are huge and he’ll take blame even if it’s Peronists blocking his reforms that keep his ideas from having a fair shot. He has less than 15% of the legislature on his side. And if he fails his market reforms are unlikely to be tried again in South America for a very long time. His popularity is almost certain to falter because conditions may get worse before they get better, and because even if they get better that will take time.
Milei isn’t entirely fiscally conservative, he has a big security detail. But on the big stuff he is. One day into his term as President he eliminated the Ministry of Culture, and many (especially its beneficiaries) won’t like that, but also it seems hard to justify given the country’s fiscal crisis.
The U.S. could sure benefit from airline competition measures proposed for Argentina. Foreign competition alone isn’t a panacea – government airports collude with airports to block access in the most desirable places and government slot controls block new entrants to congested airports as well – but we’d be far better off with both Ryanair and Singapore Airlines providing options to consumers for both cheaper and improved experiences in the air.
Can we elect him governor of California?
We’ve already got Allegiant at the low end and Polaris, D1, etc. at the high end. It would make very little sense to rescind US cabotage regulations and allow cherry-pickers from other countries to enter select, profitable domestic markets. All you’d accomplish would be to run the lower-tier US carriers out of business, and they’d be replaced with… nothing, because Ryanair wouldn’t want to build a 100-city network here, they’d only want the fat high-margin routes
The US is still the economic reference point for the world and US airlines are the most profitable when the government doesn’t interfere. Let’s not forget that the covid pandemic was imposed by a COUPLE of government bureaucrats whose theories have now been proven to be ineffective – and the world all copied what the US did. Outside of government decisions and failures (9/11, the Great Financial crisis), US airlines are the most profitable in the world.
Argentina is in a far different place as a country and AR is a financial basketcase.
From a political standpoint, Melei is proposing something because more Argentinians are hurting economically than have benefitted from the cronyism that has defined their politics.
Democracy, allowed to function, has wonderful corrective mechanisms.
the average Argentinian can no longer afford to support bloated state companies like AR.
It is not an understatement that Javier Milei is the greatest person to be the leader of any country, anywhere, of all times. More Milei, everywhere!
The United Sates has the most extensive domestic airline network in the world. It is doing just fine. Foreign airlines are not needed and would offer nothing that is mot already readily in the United Sates.
@Terry Kozma
That is not true. Once, I had to fly within a day or so and the cheapest airfare was possibly cabotage on Westjet through Toronto, which I flew on.
If the recipient market is big enough, cabotage may be ok. For example, US carriers allowed cabotage and 7th freedom flights in the EU in return for the same to EU carriers. Or cabotage and 7th freedom flights with Australia, New Zealand, Malaysia, Singapore, Japan, Korea, Taiwan, Chile, Fiji, Samoa, Cook Islands, Tuvalu, Nauru, Kiribati, Nuie, Tonga as a multilateral treaty.
The Guam US mainland market is small but if cabotage were allowed, Americans could fly via Japan in the same ticket and fare.
Largely agree with Milei’s economic program.
Simultaneously, let’s not ignore his social agenda which largely offers freedom only for his preferences but not for other views (abortion rights refusal, military dictatorship apologists, proposing taking on legislative power himself due to emergency a la Hitler’s reichstag maneuvers).
And US airlines are subsidy babies via airport and tax and aviation infrastructure and anti-competitive regulation free riding, in addition to the repeated bailouts every time there’s any event that doesn’t conform to blue skies ahead forever. For those that claim it’s only government error causing the US airlines to stutter, strange how the supportive government actions don’t play a role in the airlines’ brilliant performance otherwise. As with many corporate sectors, private profit and socialized losses. With a small amount of regulation compliance and a heavy dose of anti-regulation lobbying and litigation.
I’m a fan of capitalism, just not the crony capitalism and rent seeking behavior of significant portions of the corporate scene. Companies should bear the cost of bad decisions, insufficient capacity and negative impacts (pollution, climate change, etc).
Jig,
you simply don’t understand the economics of the US airline industry if you don’t know that US airline PASSENGERS pay user fees that more than cover the cost of operating the system.
There isn’t a single black swan event that has impacted the US airline industry since it was deregulated that was caused by the airline industry itself.
And let’s not forget that the Fed dumped tons of money into the US economy; singling out airlines – which received tens of billions of dollars out of trillions injected into the economy is simply cherrypicking data at its worst.
The biggest beneficiary of all of the government money has been the stock market. and that has the greatest positive impact on everyday Americans through retirement savings although there is a class of wealthy people that have disproportionately benefitted.
None of which changes that the US airline industry is efficient considering the high wages that US airlines pay.
And anyone that kids themselves that foreign carriers will offer comparable service within the US – if given the chance – to what they offer on international routes simply does not understand that those foreign airlines don’t have to pay US salaries when crews return to their foreign bases but it would be impossible to pay foreign airline employees working within the US what they are paid on flights to/from the US.
Still, Milei’s plan even if approved would outsource an industry as no other western country has allowed to happen.
Tim – the pandemic itself was not imposed by a couple of bureaucrats. The pandemic occurred because of the virus. You may disagree with how it was handled (but most scientists and doctors don’t) but the pandemic was not imposed by a couple of bureaucrats.
Allowing foreign airlines to operate domestically within the US is a political impossibility. The airlines, unions, industry groups, and Congress would raise holy hell if any administration ever seriously contemplated it. And even if it were allowed, it’s not like Emirates and Singapore are going to replace the small RJs flying to every medium to small sized town and city. If you live anywhere other than NYC, LA, etc, you wouldn’t see much benefit, if any. Any benefit wouldn’t be worth the political drama.
@OctinPHL.
Incorrect.
The pandemic was ushered in by less than 100 influential people, all who wanted power.
They turned a virus, into a disaster.
Whatever Don, take off your tin foil hat.
I shudder at the thought of being able to fly SQ between NY and LAX, or EK between MIA-SEA, or CX between SFO-NYC. Truly a cats and dogs living together sort of scenario. How would the world be safe for mediocre carriers with mediocre cabin crew which charge high fares, and which receive regular bailouts by US taxpayers? Harumph.
Viva Melei. The Jones Act and other anti-competitive laws should be repealed in the U.S. Won’t happen. The entrenched are too entrenched — unless we get a Melei. That won’t happen either.
Argentina will never be able to compete on the world stage because they are horribly undereducated. Less than 60% of people have better than a 8-10th grade education. Only 15% have university education. They are only medicore resource rich, and don’t have a social/political system that lends itself to innovation. Milei has already walked back a bunch of things that he campaigned on.
@ Derek. “The Guam US mainland market is small but if cabotage were allowed, Americans could fly via Japan in the same ticket and fare.” Don’t understand the comment. I took this exact route (EWR-NRT-GUM) a few years ago on United in the same ticket and fare. I could buy the same ticket from United right now.
Oct,
yes, it is correct to say that no one in the US IMPOSED the covid pandemic, it is also correct to say that a handful of bureaucrats IMPOSED the restrictions which is what did so much damage to airlines and the economy as a whole. The world followed US guidance regarding lockdowns and there are indeed true scientific studies that show that lockdowns were not effective in blocking the spread of disease just as population-wide masking was ineffective. Just because you or the majority completely to believe something doesn’t mean it was right. The US response to covid was a disaster including the economic responses which we are still digging ourselves out of.
none of which changes the airline industry has never been the cause of any black swan events that crippled it.
The US government has been the economic back stop not just for the airlines but for the economy as a whole when black swan events have occurred including 9/11, the great recession, the Gulf wars etc.
The airline industry via user fees pays its way.
NYC-NRT-GUM is not cabotage because the US has Open Skies with Japan at least at NRT and all US carriers have traffic rights on both of those sectors.
Foreign carriers would simply fly the most lucrative routes – probably large transcon markets where widebodies they already fly to the US will work – which forces up fares and reduces service in smaller cities and that is exactly what will happen in Argentina if cabotage is allowed.
Countries like Brazil, India, the US and China which have hundreds of cities over 1 million people would lose far more than would be gained by cabotage.
@DSK – You took a US carrier!
@Tim Dunn – try flying LAX-NRT-GUM on a Japanese airline though
Tim: “Just because you or the majority completely to believe something doesn’t mean it was right. “
And your belief doesn’t mean the response was wrong. I will believe the health professionals (not bureaucrats) who said the response was proper. (Or no enough.)
“there are indeed true scientific studies that show that lockdowns were not effective in blocking the spread of disease just as population-wide masking was ineffective. “
Except there are more studies that show just the opposite. Stats show (and you LOVE stats) that countries such as Sweden that were more hands off did not fare any better in the long run – either healthwise or economically. Studies down by the EU and NIH showed Sweden was not better off and its economy did no better. The Cato Institute on the hand found the opposite.
I love how you take a post about a country possibly liberalizing its air industry and turn it into your dislike of unions and science.
Oct,
it is precisely because there is no consensus about anything about covid that everyone holds everyone else in contempt over the subject.
And in the absence of clear data showing that EVERYONE benefitted, then the best conclusion is to NOT impose a solution that is known to do as much if not more harm than good.
And the reason why I drew the pandemic into the discussion is because is is the latest black swan event and there are people that use it and other black swan events to argue that airlines are government supported.
The government supported huge parts of the global economy.
And I also brought up the pandemic to note that airlines pay their own pay other than when government or external impacts derail them.
The government provides catastrophic coverage for the airline industry but they do that for the entire economy; there is nothing better or worse about how airlines handle it.
And Argentina’s president is pushing to end SUSTAINED support for AR, not something as a result of a black swan event.
For many reasons, there is no justification for the argument that US airlines need to follow Argentina’s proposed solution
Tim – “And in the absence of clear data showing that EVERYONE benefitted, then the best conclusion is to NOT impose a solution that is known to do as much if not more harm than good.
But where is the PROOF that more harm was done than good. More scientists and experts say the opposite. Doing less would have resulted in more death, more damage. You just choose not to believe it.
The beauty of our society is that we are allowed to believe different things, interpret things differently. I don’t disagree that U.S. shouldn’t follow Argentina. I agree with you. I just think your black swan moments to argue that point fail.
You should try getting outside of your bubble once in a while and read someone like John Rawls.
I read plenty of people but if you think that, in the absence of clear proof, you or those you embrace should be able to impose your solution w/o regard to the other side, then we are on very different sides of life and logic.
There was early evidence that the extensive lockdowns not only weren’t working but creating enormous harm, including for education and business.
Covid was a multi-dimensional event. I am happy to admit that NO single society or solution got it right.
I am not sure you are, though.
I am not willing to say that “just because we can’t agree” you or me get to belief that your solution was superior.
And the point is that, once again, the airline industry has NEVER created its own crisis.
It has been the victim of others decisions and actions.
Just as with insurance, you can’t intentionally do harm to yourself or your own belongings and expect someone else to foot the bill.
We should expect governments to take ownership for the ill they do as part of their decisions.
Private enterprise certainly is expected to.
And once again Tim brings crap into an argument: “ And the point is that, once again, the airline industry has NEVER created its own crisis.
It has been the victim of others decisions and actions.
Just as with insurance, you can’t intentionally do harm to yourself or your own belongings and expect someone else to foot the bill.”
First of all, no one else – not Gary, not the commenters before you – brought your black swan argument into this. You did. And it was a non sequiter. Second, your use of juvenile all CAPs to try to prove a point – again, that doesn’t need to be proven in the context of the original post or the comments – “the airline industry has NEVER created its own crisis.” No, but the airline industry has acted in ways that led to crises, or exacerbated what could have been less. No less than the
Cato Institute laid pre 9/11 checkpoint screening failure on the airlines. Does that make the airlines entirely responsible for 9/11 – not even close. But if you are saying the airline industry has never done anything wrong, well, that’s just foolish.
Tim – above you criticize Gene above for no apparent reason. He’s always wrong. Max is always wrong. I’m always wrong. You frankly are worse – at least we can admit there are shades of grey. You can’t. And you simply ingnore and don’t respond to things that are above your comprehension.
I
I’m outta here because arguing with Tim is like banging one’s head against a cinderblock wall. Except the wall is smarter than Tim. Tim brings Covid / black swan events into the comments a full hour before any other poster does. 7:20 vs. 8:26. There was no need to given the context of the original post. It just go show that Tim believes if you throw enough sh!t at the wall, some will stick. Go away TIm.
of the people you listed, Gary is the only one that IS NOT always wrong.
I happen to find plenty I agree w/ Gary about.
You and others want us to believe that because I debate multiple people, I am the one that is wrong.
You make all kinds of dogmatic statements without proof other than “you should know how smart I am but you clearly don’t”
Who honestly cares if you don’t think black swan events are related to financial support for airlines?
I raised the issue to show – which you have yet to prove otherwise – that the airline industry has not created their own crisis. Any crisis that has affected the entire industry has been external.
THAT is not the case for Argentina and the fare of AR is being decided because they can’t make money when many other airlines have made money.
I’m sorry if you can’t see how those issues are connected.
Because you can’t see it doesn’t mean it isn’t real.
of the people you listed, Gary is the only one that IS NOT always wrong. I happen to find plenty I agree w/ Gary about. You and others want us to believe that because I debate multiple people, I am the one that is wrong. You make all kinds of dogmatic statements without proof other than “you should know how smart I am but you clearly don’t” Who honestly cares if you don’t think black swan events are related to financial support for airlines? I raised the issue to show – which you have yet to prove otherwise – that the airline industry has not created their own crisis. Any crisis that has affected the entire industry has been external. THAT is not the case for Argentina and the fare of AR is being decided because they can’t make money when many other airlines have made money. I’m sorry if you can’t see how those issues are connected. Because you can’t see it doesn’t mean it isn’t real.
btw, mr. oct,
when you post under your real name and that you have been on the boards of either DAL or any of its equity partners, then I will take your word what Delta has and has not discussed with its equity partners.
For someone that cowardly posts under a fake name, you give up any credibility you might have.
You are way too dogmatic for someone that uses a fake name.
and Gene is not wrong. He is just self-centered.
@ Tim. The restrictions were imposed by a couple of bureaucrats copying China. The Chinese were lying. The bureaucrats conned Trump & bragged about in their books.
@ Oct. Even NY magazine has written about the failure of lockdowns & costs imposed. You are out of step with your people, whose current mission is to get out front of being held accountable. I understand what is wrong with you if you are reading too much Rawls. Try some Kant or Burke.
He’s a fascist. No wonder Gary ignores all of that. As a good GOP voter he supports fascism himself
@747always
If that’s fascism then we need more of it.
It’s time for the Argentine miracle.
People seem to forget that folks were dropping like flies in 2020 with Covid mortality rate many times greater than flu. It was pretty scary. Even now, after all the vaccines and weaker variants, it’s still 60% greater than flu. It’s a nasty virus that required a dramatic response when there was no vaccine for it.
Let’s hear it for the fascist populist in Argentina pretending he’s a libertarian, who is just going to hand off industry to the same hyper moneyed interests that keep concentrating wealth.
Signed,
Gary
@747always – I believe the last time I voted for a Republican was 31 years ago but ok
You’ve got all your data wrong, dude. Starting with Aerolíneas Argentinas and other state managed companies such as YPF have actually had great revenue the past years.
I strongly suggest airlines that want to start “competing” in Argentina to care about improving their local services, FIRST.
Second…. Be prepared to offer cabotage flights for 20usd, which is more than the average argentinian can afford.
Get your data right, get your sources right.
Deregulation ruined the airline industry and that was Reagan’s doing! It was also the demise of radio and TV. Gave rise to far right wing propaganda talk radio.
@Nigel “Deregulation ruined the airline industry and that was Reagan’s doing! ”
1) Airline deregulation happened in 1978, Reagan was elected in 1980. It was championed by Ted Kennedy and Ralph Nader!
2) During the regulated era the government forced airlines to keep fares high, rather than protecting consumers
3) Airlines remain one of the most heavily regulated industries – what changed is simply that the government stop deciding where airlines could fly and what prices they’d charge.
Someone please end the embargo on combs to Argentina….lol
Our daughter just yesterday flew out of Argentina back to Australia where she lives. I was interested in what the man on the street thought of their new president and what was coming. Even though she said thousands seemed to be protesting, everyone she talked to knew it would be tough for awhile, but all also said they were very hopeful for their futures. During her layover in LA, she said it was so depressing on the streets compared to Argentina and Chile. Even Australia feels better than the US. I told her to please do not move back to the US.