MercoPress. South Atlantic News Agency

Chilean air market “lacks competition”

Following Aero Continente's announcement that it will be back in the air by early September, small independent operators have cancelled plans to expand.
Andrés Pivcevic from DAP Airlines said that while current market conditions remain, limiting independent operators activities, “we are canceling all our expansion projects”.

Aero Continente, an aggressive Peruvian company that irrupted in the Chilean market with cheap fares eliminating travel agents reservations and all service aboard, was forced to stop flying last July following allegations that its owners were involved in money laundering.

However, a month later an Appeals Court over ruled the decision and Aero Continente with its five Boeing 737 announced it will begin flying again.

Mr. Pivcevic in direct reference to Lan Chile-Ladeco indicated that "when you dominate 90% of the market it's relatively easy to push competitors out of business by compensating the different air fares". "I believe that government should set minimum rates to ensure fairness and competition or otherwise have a good look at Lan Chile's marketing policies", insisted Mr. Pivcevic, adding that the Chilean air passenger market keeps growing, but "we lack a proper competitive environment". Mr. Pivcevic said the situation was particularly unfair for people living in extreme areas of the country, such as Punta Arenas, dependent on air transport.

Apparently the current market situation is extensive to other small operators such as National Airlines and Avant Airlines that have also ceased flying.

Rogelio Diez from Avant Airlines remarked "people have become accustomed to cheap fares and profits have dropped dramatically".