MercoPress. South Atlantic News Agency

Lan Chile faces drastic fine.

The Chilean Fiscal Prosecutor after carefully studying the case presented against Lan Chile by citizens organizations from Punta Arenas has proposed the Chilean flag carrier be drastically fined the equivalent of 250,000 US dollars for having allegedly breached in 37 occasions air fare legislation. The proposed fine is the highest under the current legislation.

However Lan Chile has fifteen days to defend its case before the Resolution Committee that will finally decide on the Fiscal Prosecutor's request.

Apparently when Lan Chile took over rival Ladeco in 1997 to become Chile's main national and international carrier it agreed to several self regulatory actions regarding among other things air fares, to ensure that in non competitive destinations, (such the case of Punta Arenas and Easter Island) the average monthly fare per kilometer can't be higher than in competitive routes.

Fiscal Prosecutor Pedro Mattar pointed out that 524 groups of Chilean domestic routes were analyzed in the period extending from January '98 until February 2003 and there is evidence "Lan did not comply or justify the non compliance of the self regulatory agreement in 47 cases that is 9% of the total".

Lan Chile in a release published in the country's main newspapers points out that in that period (?98/'03) revenue from domestic flights was equivalent to 971 million US dollars, and the "additional income of the alleged 37 infractions would have meant an extra 0,03% income. This only goes to show that Lan Chile has complied with self regulatory air fares in 99,97% of cases".

Lan Chile also highlights that none of the claims involve flights to Punta Arenas or Easter Island, "where the company has been particularly concerned given the extreme situation" and emphasizes that the report of Mr. Mattar of last April says that "Lan has not taken advantage of its dominant position under conditions where the company's costs are in US dollars".

Mr. Mattar rectified the Lan Chile release saying that self regulatory action refer to groups of routes and not revenue or an individual route.

Chilean Congressmen Pedro Muñoz and Zarko Luksic, co-sponsors with 23 Punta Arenas citizens' organizations of the presentation against Lan Chile said this is the result of a long struggle that must lead to an end of the company's "monopolistic procedures" involving the passing by Congress of competitive legislation similar to that applied to the Chilean telecommunications market.

Mr. Andres Pivcevic from DAP airlines that was forced out of the Santiago-Magallanes Region market recalled from Punta Arenas that "people's protests and demonstrations" have caused all this uproar and warned that "if we want positive results, we must keep mobilized". Mr. Pivcevic also underlined that it's not enough with sanctioning the self regulatory violations, further actions must be taken regarding the monopoly situation since, "the Prosecutor is working on past violations, there's not a word about the future and Lan Chile could easily get off the hook by paying the fine and then go on acting in the same way".

La Prensa Austral from Punta Arenas in an editorial recalls that so far this year Lan Chile twice increased fares to Magallanes arguing international uncertainty, (US-Iraq conflict) that caused an increase in oil prices and the volatility of the US dollar in the Chilean money market. However "calm has returned to world markets and Lan has not readjusted its fares".