Government Deepens Changes in National Aeronautical Policy

                                              

Through Emergency Decree 70/2023, published on December 20, 2023, the Executive Branch considered that the current aeronautical policy limited the development of the air commercial industry in Argentina and introduced significant modifications to the Aeronautical Code, with the repeal of a series of essential rules under the previous regime.

One of the aspects Decree 70/2023 modified was that the air transport services ceased to be subject to concession of the Executive Branch and became only subject to authorization. At the same time, the new wording of article 102 of the Aeronautical Code no longer requires a prior public hearing to grant the concession.

On the other hand, Decree 70/2023 eased the possibility for the Executive Branch to allow using foreign aircraft for air commercial and general aviation services, seeking to obtain reciprocity and double surveillance agreements for operational safety, and ensuring that such aircraft are crewed, assisted, and maintained by Argentine personnel.

Another relevant change was the free regime for setting tariffs, allowing companies to set them without restrictions.

Many of the reforms introduced by Decree 70/2023 were subject to further regulation. To this end, on February 7, 2024, Resolution 6/2024 of the Ministry of Transport created the Commission Regulating the Aeronautical Code, within the Undersecretariat of Air Transport, to draft a regulatory text for such regulatory body that contemplates the changes Decree 70/2023 incorporated.

On July 10, 2024, the Executive Branch published Decree 599/2024 in the Official Gazette. This Decree covers three major axes that deepen the changes in the national air commercial policy. First, a new Regulation of Access to the Air Commercial Markets was enacted to streamline the system of access to the air commercial markets and give it greater legal certainty. Also, the Executive approved the regulation of the new text of the Aeronautical Code, article 110, which regulates intercompany agreements. It also ordered the enactment of a new rule to regulate operationally the use of the aeronautical system capacities.

In its recitals, Decree 599/2024 highlights that the air commercial activity must be governed by the principles of free access to the markets, commercial loyalty, tariff deregulation, strict protection of operational safety and aviation safety, contractual freedom, dynamism, and efficiency, among others. Based on this, the new Regulation on Access to the Air Commercial Markets provides for an expeditious system of authorizations, under principles such as free access to the market for new exploiters, promotion of fair competition, tariff deregulation, and freedom in the setting of frequencies.

Thus, to be authorized to carry out national and international regular and/or non-regular air transport services, air work services, or operational and general ramp airport services, human or legal persons with legal domicile in Argentina must file a digital/electronic submission before the corresponding competent authority. The authority must issue a decision within a short period of time. As was established in the reform Decree 70/2023 introduced, the requirement of a prior public hearing for the authorizations of air transport services is suppressed, opting for a more agile procedure.

Regarding the requirement of article 99, paragraph 2, of the Aeronautical Code, which now provides that the control and direction of the company operating domestic air transport services must be in the hands of "human persons with legal domicile in Argentina," the new Regulation provides that this can be proven by submitting an affidavit signed by the legal representative, identifying the human person who exercises such substantial control.

As to air commercial authorizations for foreign companies to provide the services listed above, the new Regulation establishes as a general principle that such authorizations must be granted under strict reciprocity conditions. In turn, article 25 of the Regulation provides that, unilaterally, the competent authority may grant authorizations that include cabotage traffic rights, under the same condition.

A series of decrees and resolutions were repealed together with the approval of the Regulation on Access to the Air Commercial Markets. Among these were the tariff bands for national flights, and the previous regimes of concessions and authorizations for exploiting air cargo transport services and combined air transport services, among others.

Title Two of Decree 599/2024 approves the regulation of article 110 of the Aeronautical Code regarding intercompany agreements. First, it provides that these agreements must be submitted before the competent authority before implementing them. In turn, according to article 8 of the Regulation, intercompany agreements may be carried out freely, provided they do not result in a practice prohibited by the Law of Defense of Competition 27442. The Decree provides for the intervention of the National Competition Authority if there is a concentration under the terms of such law.

Finally, Title Three of Decree 599/2024 instructs the Ministry of Transport to take the necessary measures to issue a Regulation for the Allocation of Capacity and/or Frequencies for Domestic and International Air Services. In principle, within 180 calendar days, a transitory regulation will be issued, which will remain in force until October 31, 2025. As of then, the permanent regulation will apply. Once the transitory regulation becomes effective, Decree 599/2024 repeals Decree 879/2021 (regime of allocation of capacity and/or frequencies for international services) and Resolution 180/2019 of the National Aeronautical Authority (ANAC).

As it can be seen, Decree 599/2024 introduces important modifications in aeronautical matters, in line with the new policy of the Executive Branch. The Government is  expected to continue issuing regulatory rules to implement the changes initiated with Decree 70/2023.

Meanwhile, through Decree 606/2024, the Executive Branch ordered the intervention of ANAC for 180 days. The intervenor appointed by the Executive is empowered to carry out the ANAC actions and functions stated in Decrees 239/07 and 1170/07 and its complementary rules. The vesting also includes preparing and submitting a report on the situation of ANAC, its current structure and propose its reorganization; reporting on its financial status; developing procedures to adopt the Latin American Aeronautical Regulations (LAR); implementing the system of delegated aviation authority in Argentina; and any other mechanisms to analyze and digitalize the ANAC's processes.