The Development of the so called low cost sector in Argentina has cost workers dearly, says Ricardo Frecia.

The neo-liberal policies adopted in Argentina in the 1990s allowed low-cost companies to come into being and grow under their protection. In particular the huge share of the coastal and regional market that was abandoned by the now privatised Aerolíneas Argentinas and Austral allowed them to flourish.

The development and growth of the typical low-cost airlines Southern Winds (SW) and LAPA (together with Dinar, Aero Vip and American Falcon) during that time was intense. Indeed it was as intense as the deterioration of Aerolíneas Argentinas and Austral, which began the year 2000 on the verge of bankruptcy.

The safety, working conditions and pay of workers in the sector deteriorated to unprecedented levels as a result of social dumping and the general consolidation of the anti-trade union policies adopted by these new companies. Breaches of the aeronautical regulations governing the maximum working and rest time for cabin crew, refusal to sign collective labour agreements, persecution and lack of recognition of trade union representatives and male and female workers, and even the use of flags of convenience (SW) were commonplace.

Virtual airline
Aerolíneas Argentinas and Austral were rescued, thanks to a concerted campaign by the Argentinean airline trade union movement (the AAA, led by Alicia Castro at the time). This upset the balance of power and the battle for control of the Argentinean commercial airline market.

Airlines once again had to compete to get back routes, schedules and markets, just as we demanded during our campaign. The low-cost airlines, which had managed to compete on fares with buses and trains, began to suffer the impact of the change.

In early 2003 Dinar ceased operations, and in April (during Easter week) LAPA did the same, having tried a few months earlier to take over the monopoly of the Argentinean coastal and regional market. Over 1,000 workers, both male and female, were left jobless. SW, without credit and with a debt in excess of US$ 50 million, was ceasing operations and threatened to leave hundreds more people unemployed.

A new strategy then emerged, the basic tool of which was the need and desperation of workers, to force the government to award a huge subsidy for fuel and to pay wages to just one of these companies. A decree was signed creating Líneas Aéreas Federales S A (LAFSA), a subsidised, planeless “virtual” state airline, which had to incorporate all LAPA and Dinar personnel, only to be privatised within 180 days of its creation.

Where we are
Finally, in September 2003 LAFSA signed a co-operation agreement with SW, by means of which the latter employed the personnel and in exchange received $3,200,000 to pay for its fuel.

Besides the distortion this introduced into the commercial airline market, it is now the case that crew members working for SW coexist with those working for LAFSA, doing the same job on the same SW flights, but they are discriminated against by SW, in comparison with the LAFSA crews.

Southern Winds crew members receive lower wages and travel allowances and do not enjoy the minimum guarantees established in the collective labour agreements, since there has been a systematic refusal to sign them. We have filed a claim for discrimination with the competent authorities and are awaiting a resolution.

Anti-trade union policies, breaches of aeronautical regulations and now even discrimination are fostered by this inverted rewards system, in which the government gives subsidies to companies that do not obey the law. This subsidy is also discriminatory, according to claims by smaller airlines like American Falcon and Aero Vip, among others. In order to avoid the monopoly of Aerolineas Argentinas the government gives subsidies only to one other airline – SW – instead of giving to all of them.

Paradoxically, a minimum of 30 per cent of the shareholding of the now subsidised SW is held by Eduardo Eurnekian, the owner of Aeropuertos Argentina 2000 and former owner of the bankrupt LAPA.

Tempting buyers
According to a recent article published in the daily newspaper Infobae, Christian Maggio, General Manager of SW, said that “together with the company’s new shareholder, we hope to buy LAFSA.” They acknowledged that the company is negotiating to sell parts of the airline’s shareholding (the most likely candidate is the Chilean LAN, also recognised for being anti-trade union). On the basis of this operation, SW plans to submit a proposal to buy LAFSA, which the government promises will be put out to tender next September.

To this end, in an unprecedented act, the under secretary of state for commercial air transport (a former union representative) awarded national and international routes to the planeless virtual LAFSA, in order to make it more tempting to the potential buyer. According to Infobae, private individuals have been brought in to help draft the information for tenderers, with the intention of giving it a more attractive bias. This has led, for example, to the establishment of the idea that the buyer would not pay the state to gain possession of the airline, but that the money would be capitalised within the company.

It reminds us of the privatisation of Aerolíneas Argentinas when, in order to “interest tenderers”, it was sold in exchange for devalued foreign debt bonds, a sum of money that was never paid, and the promise of investments that were never made.

In Argentina, therefore, it could be said that the “low-cost carriers” retain this characteristic only for adventurous entrepreneurs who are connected to the levers of power. They have been, and promise to continue to be, of tremendous cost to the state, transport and their users in general, and to the workers in the sector.
In order to face these challenges, our action is geared towards achieving activity or framework agreements to protect working conditions, and to defend the passenger cabin crew member’s licence, obtained after years of work by our union. Indeed, joint work with the trade unions in the region will be essential to support our battle.



Ricardo Frecia is General Secretary of Asociacion Argentina de Aeronavegantes (AAA) representing cabin crew in Argentina.