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Aerolíneas Argentinas S.A. - 1950s–70s: Striving to Stay Aloft Amidst Government Upheaval

1950s–70s: Striving to Stay Aloft Amidst Government Upheaval

On May 3, 1949, a new nationalistic government in Argentina, led by Juan Perón, merged the four joint-stock companies—Aeroposta Argentina, FAMA, ALFA, and ZONDA—into the new state airline, Aerolíneas Argentinas. This monopoly would last until 1956. After working to integrate the aircraft and routes of all four operations, Aerolíneas Argentinas achieved operating efficiencies and became a member of the International Air Transport Association (IATA).

When a military coup ousted Perón, however, a new provisional government liberalized the aviation market again. Competition ensued as Argentinian investors formed new airlines. Privately backed Transcontinental, S.A., for example, provided six years of competition before financial woes resulted in its being taken over by Austral, another new private carrier. Aerolíneas Ini and Transatlantica were two other competitors for Aerolíneas Argentina's business during this period.

None of the new entrants had the experience or resources of Aerolíneas Argentinas (AR). AR was able to launch South America's first commercial jets in March 1959: six Comet IVs received to settle a bill for harboring British troops during World War II. Within a couple of years, however, half of these had crashed, and though no fatalities were reported the company's president was forced to resign. Under new leadership, AR continued to expand and modernize its fleet, retiring older aircraft and establishing service to popular resort destinations.

By the 1960s, AR was the leading South American airline, flying more than 600 million passenger-kilometers a year. Financial and managerial woes were emerging, however. In 1963, the airline dropped out of the International Air Transport Association (IATA), a cartel of world airlines, when that organization denied AR the right to impose a surcharge for flights on jets. Both AR and its competitor Austral had been losing money on the regulated domestic fares and had been granted government subsidies to help offset the losses. A new board of directors took over AR in June 1964 amid charges of mismanagement and corruption at the airline. The next year, the new leaders set about improving the airline's fleet, establishing a relationship with Boeing, by ordering several of that company's 707s, which would last for many years. AR rejoined the IATA during this time. The year 1966 saw yet another change of administration.

In 1967, in order that AR and Austral might co-exist under government control, a new Argentinian president divvied up domestic air routes between Austral-A.L.A.(Aerotransportes Litoral Argentina, its new partner) and AR. By now, AR's Boeing 707s were flying the world's longest nonstop scheduled flight at the time: 5,700 miles from Rio de Janeiro to Rome. Service to New York also had begun, and by the end of the decade, AR had obtained clearance to open service to the West Coast of the United States.

In 1972, Argentinian and U.S. authorities briefly locked horns over the rights of Pan American and Braniff airlines to serve Argentina. When Argentina officials denied these American airlines the right to expand their routes in Argentina, the U.S. government responded by attempting to curb AR's presence in the United States. Settlements over the routes were eventually made, and AR was able to add nonstop service to Miami and Cape Town in 1973, the latter in conjunction with South African Airways. In December, new management installed by the returning Juan Perón (the second executive shuffle in a year) gave the airline a new emphasis on commercial viability in route selection and fare determination.

Although Perón died in 1974 and his wife, Isobel Perón, was overthrown in 1976, the structure of the airline remained relatively unchanged. The company continued to weather upheavals in management, intense competition from Austral, and ever-changing government policies. AR began operating massive Boeing 747 widebody jets to Madrid in January 1977, launching a period of expansion. After testing the route with charters, AR pioneered the first scheduled (monthly) service across Antarctica, to Auckland, New Zealand. AR began the 1980s as the third busiest airline in South America after VARIG and Mexicana, flying six billion passenger-kilometers a year.