Latino airline jumps into exec charter biz

 - August 11, 2008, 6:17 AM

Argentina’s economic crisis has created a unique business experience for the country’s national flag carrier, Aerolíneas Argentinas. Over the past three years the country has been mired in recession, prompting many businesses to cut costs or risk bankruptcy. The cost-cutting measures, which forced more than 200 companies to dispose of their business jets last year alone, prompted Aerolíneas Argentinas to enter the executive jet market. Last month, the company debuted its newly refurbished Boeing 737-200 to Argentine business clients in need of executive charter service.

Since the “Executive Jet” service was launched, the company signed three contracts with customers, according to Aerolíneas Argentinas director of institutional relations Julio Scaramella. “The company has been pleased with the interest the service has already generated among business people,” he said, adding that the airline is confident the service has a promising future.

The company expects to have three airplanes in its fleet by the end of next year. The second bizliner should begin the renovation process late this year and a third will follow shortly after. All of the airplanes will come from the airline’s current fleet, which has excess capacity due to a steady decline in the number
of routes and passengers served through the end of last year.

According to Scaramella, the company’s executive jet service is the only one of its kind in the Americas. “None of the major carriers in the United States or Latin America has similar services,” he added.

The airplane can fly nonstop to any destination in Argentina and can also reach Rio de Janeiro and São Paulo, Brazil; Santiago, Chile; and Santa Cruz, Bolivia. The hourly cost is $6,000, and the recently refurbished airplane has room for 29 passengers, offering meeting rooms, galleys, a private office and 10 first-class seats. The airplane also has in-flight services, including a menu personalized for each client and a full bar. The 737 will be based at the Jorge Newberry Airport located near downtown Buenos Aires.

Aerolíneas Argentinas began refurbishing its first bizliner at the end of last year, when it signed a contract with U.S.-based CompletionAir to design the airplane’s interior. All of the parts had to be imported to meet Boeing’s standards, according to Scaramella, but the renovation took place in Argentina. The refurbishment cost roughly $4 million and required 62,000 man hours and nine months to complete. The airplane was then subject to Boeing’s D-check inspection and had to pass both FAA and Argentina’s Aeronautical Certification Agency specifications.

Like many Argentine companies, Aerolíneas Argentinas was hard hit by the recent economic crisis. It filed the Argentine equivalent of Chapter 11 bankruptcy in June 2001. With financial backing from its Spanish owners, however, the company appears to be back on track. Last year the airline posted significant profits and is now preparing to go public on the Argentine stock exchange. Several other local airlines, including LAPA and Dinar, did not fare as well and were forced to cease operations as a result of the economic crisis.