Flybondi: legal battle against decree mandating fare bands on domestic flights

There’s a judicial file that’s quiet but constantly moving and this week could generate a bit of noise: it’s about the decision of low cost airline Flybondi to question the Government in courtincluding filing a precautionary measure against the application ofe minimum air fare.

On Friday, this file was returned in federal court to Federal Administrative Litigation No. 7, which governs Pablo Gabriel Cayssials, after a series of consultations with public bodies. So everything is ready for this magistrate decide whether or not to accept Flybondi’s request.

The government order re -establishing a system of tariff bands, such as those implemented until mid -2018, was adopted on December 24. On Christmas Eve, the Government published decree 879 in the Official Gazette, in which it ordered run the gang system within a not more than six months. If that schedule is met, the band rates must be implemented again before the end of May.

Now only domestic flights are conducted three companies: the state Argentina airlines and the low cost Flybondi Y JetSmartboth controlled by american capitals. Handled by airlines just over 70% of the market and the other two airlines share the rest equal parts.

Low cost competition against airlines is, certainly, on the side of price. Tickets offered at low cost with an advance of two or more months, to the same destinationis usually up to 50% cheaper or more, in the first seats, than in Aerolineas Argentinas.

The cheaper seats they are not for the whole flighteither from Flybondi or from JetSmart. Instead, the rate is usually promotional for some some seats, purchased in advance. But it helps the two companies position themselves against the competition caused by Aerolineas in a different kind of field: they don’t have the State subsidy that the so -called “flagship airline” has and they also have a smaller number of aircraft that available.

But, according to the recitals of Decree 879, this kind of low price competition is “destructive” not only for Aerolineas Argentinas but for other airlines that want to establish themselves in the local cabotage market.

The order did not mention his name and surname, but officials from the Government and from Aerolineas Argentinas were instructed, off -screen, that these airlines would be Avian and Andestwo companies stopped flying during the last phase of the Macri government.

That period, between mid-2018 and the end of 2019, was when rate bands were deregulated. But, insignificantly, it is also when the dollar price from 20 pesos to 40 pesos in a few monthsWherein all airlines are barefoot between the prices of internal flights sold floor Y cost in dollars to pay for the rental of fuel and aircraft, among other services.

This summer, shortly after the summer court fair, Flybondi filed an injunction against the restoration of rate bands. The strong argument is Decree 879 “weakens competition and efficiency in the sector, leaving the mandates promised in art. 42 of the Constitution “.

Flybondi’s offense was explicitly intentional reverse the law. However, its directors, led by the CEO Mauricio Healthy, They continue to participate in consultation rounds convened by the National Civil Aviation Administration (ANAC) and the Ministry of Transportation.

The airline, which is controlled by the American investment fund Cartesianalso asked in that same command a “new” system for assignment capacity and frequency in terms of international flights. In this case, Flybondi’s question is that The airlines were given unreasonable authority for beto to its internal competitors.

The decision to establish fare bands runs on two identical tracks: formally, there was a round of conversation both with the airlines already flying (Aerolineas, Flybondi and JetSmart) and with Avian and Andes.

But these talks are only at the consultation level, because the last word on aviation policy is in the group. The Campora. Mariano Recaldenational senator and head of that political space, was president of Aerolíneas between 2009 and 2015 and is now make meaningful decisions on these issuesas his own relatives admit.

Industry sources pointed out that Flybondi’s legal presentation it is not exhaustive of the decision to be made by Judge Cayssials, in case the magistrate fails to issue the precautionary measure. “This is an issue that is not on the official agenda, except their governor. And the legal proposal the company is looking for come back this law, “they affirm.