The Lower House of the Chilean Congress will be debating in the coming days a report from the Extreme Zones Committee on the Chilean domestic air market which among other proposals recommends splitting Lan Chile's dominating position and tackling only operator situations such as happens with Magallanes Region.
The report indicates that Chilean domestic air market, both passenger and freight, is highly concentrated in Lan Chile which has a dominating share of 88,5% and 95%.
The market is distributed between Lan Express, 68%; Lan Chile 20,5%; Sky Services 11,3% and Aerovías Dap 0,2%.
A majority of members of the Congressional committee consider this concentration excessive almost a "monopoly", which is highly detrimental for the extreme zones of the country and recommend a stricter monitoring of the self-regulation to which Lan Chile is submitted according to current legislation.
The report recommends greater transparency in the elaboration of air fares and the promotion of improved competition from domestic airlines to extreme zones, mainly by extending the VAT elimination benefit that applies to international flights.
Further on the report requests the Chilean Antimonopoly Committee to consider splitting Lan into different affiliates regarding both domestic and international passenger and cargo transport so as to among other things avoid the conglomerate's "crossed subsidies" which hinder competition.