MercoPress. South Atlantic News Agency

Lan Chile replies to monopoly allegations

“Air rates to the extreme regions of the country are the most economic per mile flown, particularly those to Punta Arenas”, Lan Chile officially replied to mounting concerns from several Chilean Congressmen regarding possible monopoly practices in the air link to Magallanes Region.

In a release made public this week Lan Chile states that "the Chilean domestic air market is completely open and competitive without access barriers of any kind. Therefore it's a market entirely and permanently challengeable for any national or foreign company registered in Chile. In fact during the last decade, besides Lan Chile, Ladeco and Lan Express other airlines have operated or are operating in the domestic market, among which, Saba, National, Alta, Aerochile, Aerovías Dap, Avant, Aerocontinente and Sky".

Three Congressmen, one of them from the Extreme Regions Committee, Zarko Luksic, plus Pedro Muñoz and Francisco Encina publicly questioned Lan Chile's air rate policy regarding Punta Arenas and demanded action from the country's Attorney General in Economic Affairs.

Regarding Lan Chile and LanExpress operations in the domestic market, the release indicates that, "a) in cities with no competition, there's a rigorous air rate regulation program stating that the average rate can't be above those where effective competition exists; b) air rates to extreme regions of the country are the most economic per mile flown, particularly those to Punta Arenas equivalent to those to Arica (north of Chile) where competition exists; c) Between 60 and 70% of sales in extreme regions belong to the two cheapest air rates (to Punta Arenas less than 140,000 Chilean pesos); d) Chilean domestic air rates are among the lowest in the world's air industry, and e) because of the current difficult situation Lan Chile has not included in its rates the significant increases in fuel prices and the exchange rate, two essential components of the cost structure of our company".

The release also mentions Lan Chile's promotional rates for students from the XI and XII Regions and the company's commitment to the tourist industry, including flights to Easter Island, plus the permanent technological updating of equipment.

Finally Lan Chile underlines that the Chilean air industry, both cargo and passenger, domestic and international, is extremely competitive and has received no subsidy of any nature, contrary to what has happened with the world's largest companies since the September 11th crisis.

"To achieve this and continue in this difficult industry requires a high degree of managerial efficiency plus a wise and significant investment policy".

Sky Airline next year in Punta Arenas

Chilean carrier Sky Airline will be flying to Punta Arenas some time in the first half of next year, according to Jürgen Paulmann president and main shareholder of the domestic company that operates from Santiago.

"In November we're heading south, Temuco, Puerto Montt and Balmaceda; once we've consolidated these links, we'll fly to Concepción and then we'll have our eyes on Punta Arenas", Mr. Paulmann told Punta Arenas' main newspaper Prensa Austral.

Sky Airline currently flies to the north of Chile, Arica, Iquique, Calama and Antofagasta.

Mr. Paulmann said the company has two Boeing 737-200 flying, a third which is undergoing a routine checking and two others in the process of certification, "so in November we'll have five aircrafts operational".

Sky Airline was inaugurated last June and already has an 8,6% share of the Chilean domestic market.

"Our goal is 20% of the market, and the latest statistics are very encouraging since we actually fly to only a few destinations", added Mr. Paulmann.