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Hoping to Compete with Low-Cost Airlines, Bus Companies Implement New Pricing Measure

By | [email protected] | July 5, 2018 3:04pm

AutoblogWill the measure slow down the decrease of passengers traveling by bus? (Photo via autoblog)
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Two days ago, we told you about how the government intends to remove price floors on domestic flights within Argentina to create more competition within the sector. Although welcomed with open arms by low-cost companies, not everyone was not so pleased with the announcement. Aerolíneas Argentinas, for example, will surely have to adapt to the competitive costs of companies such as Flybondi; meanwhile, the bus sector, a mode of transport still widely used for medium- and long-distance journeys, is also planning its next move.

“We are concerned” said Néstor Carral, the President of the Argentine Chamber of People’s Vehicle Transport (CAPAT), to the press. Land transport officials quickly reacted to the measure, and said they were calling for a meeting in the following days with the Minister of Transport Guillermo Dietrich.

According to Carral, they would need to see a 35 to 50 percent price decrease to compete with the new flight prices. The sector is already experiencing a downturn, losing customers year after year. In 2011, 52.7 million people traveled by bus, a number that dropped to 37.3 million in 2016 and which dipped another 5 percent in 2017, according to official estimations.

Guillermo Dietrich wants more competition within the Argentine travel sector (Photo via El Cronista)

Their prayers have been answered, in one sense; rather than helping them by sanctioning the low-cost companies, the government decided to apply the same rules for everyone. Transport Minister Guillermo Dietrich announced that the government will eliminate price minimums on bus transport as well, and declared his wish to see them becoming “low-cost companies.”

The measure would only be applied on mid- and long-range journeys. The Minister explained: “New low-cost bus services are appearing and are going to [continue to do so]. Therefore, we are completely liberating the bus sector from price floors, so they can cover how much they want.”

While talking to TV news channel TN, he continued by stating that “bus companies also need to be low-cost. They were designed to replace an air route that wasn’t there, or was a rip-off.” However, new paths have been emerging recently by low-cost companies, which explains why the bus sector needs competition, because its costs have grown: “This is why in the last year and a half, hundreds of thousands people have traveled by plane for the first time,” Dietrich continued.

In the same interview, Dietrich expressed his support for companies like Flybondi, which “generate jobs and more economic development. If we continue with this strategy, we’ll have more companies, more routes and more competition.”

Moreover, he added that the tax on overseas flights wouldn’t increase, what had already been confirmed by Nicolás Dujovne but denied by Marcos Peña. “We are looking at some alternatives on the topic, but it is not going to increase. We don’t believe, as a government, in this measure, we think it is inconvenient,” he concluded.