Affordable Argentina: Not Anymore

It's no secret that over the past five years Argentina has become one of the hottest travel destinations in the world. The country's economic crash in 2001 and the subsequent devaluation of the peso turned Argentina into an absolute bargain for dollar and euro-toting tourists. Millions have been pouring in to enjoy the country's exotic destinations, like the breathtaking Iguazu Falls, the colorful valleys of Salta and Jujuy, and the pristine beauty of Patagonia.

Because of Argentina's size -- it is the world's eighth-largest country -- airline travel is a must for any tourist on a tight schedule, and flights from Buenos Aires to these locales were typically priced around $250 dollars roundtrip. That reasonable rate, coupled with affordable and ample hotel options, and even greater savings on food and fun, and visitors could count on a terrific Argentine vacation at bargain-basement prices. But things have changed.

The country's largest air carrier, Spanish-owned Aerolineas Argentinas, has significantly increased prices for domestic air travel for foreigners, in some cases up to 200%. For example, a roundtrip ticket from Buenos Aires to the glaciers 1,400 miles away in El Calafate can now cost some $600 dollars for a U.S. citizen, almost as much as a flight from Miami to Buenos Aires on the same airline. This unprecedented price hike that has tourists and travel agencies up in arms.

"It's discrimination and corruption, plain and simple," says Carlos MacDonald of the Argenet Travel agency in Buenos Aires, which has already had groups from Canada, Japan and Spain cancel their planned tours of Argentina because of the increase.

Hefty Price Hikes
The policy has been in place since August, when the Argentine government passed a decree that relaxed existing price controls and allowed airlines to increase rates 20% for Argentine citizens. But in a move that lawmakers didn't (or perhaps did) anticipate, Aerolineas Argentinas seized the opportunity to make more money, and quickly created new pricing categories for foreigners on domestic flights.

There has been little grumbling from Argentines about the 20% increase -- the first since 2002 -- but many international tourists are not willing to absorb such a hefty hike.

"Business is down 40% and I will continue to lose customers until the government intervenes, but that will likely never happen," says MacDonald.

Argentina's economy has enjoyed four straight years of 8%-plus growth. Tourism has undoubtedly been one of the driving forces behind this recovery, but some believe that the tourism bubble will burst if domestic airline prices remain at their current levels. Foreign tourists will likely continue to soak in the sexy tango-tinged nightlife of Buenos Aires, but perhaps forego side trips within Argentina in favor of cheaper alternatives next door. After all, Uruguay has world-class beaches, the Iguazu Falls can be seen from Brazil, and exploring Patagonia on the Chilean side of the Andes is just as exhilarating.

"I've already had customers who changed their itineraries and went to Chile, where the prices are the same or better, and where the wine is just as good as ours" says Ricardo Beccaceci of Mendoza Viajes, a travel agency located in the heart of Argentina's wine region.

Edgardo Dellatorre, a representative from Argentina's Secretary of Transportation, agreed that the price spike takes unfair advantage of foreigners, but denied that there is any collusion between the government and the airlines.

"The Argentine government can only regulate prices for Argentine citizens. We have no control over how foreigners are charged," says Dellatorre. "But we are working to eliminate this type of discrimination." 

Jorge Molina, a spokesman for Aerolineas Argentinas, vigorously defended the company's move as necessary to cover increasing costs, and pointed out that other local carriers, like LAN Argentina, have done the same.

"This situation is similar to what they have at Disney World, where Florida residents get a cheaper rate than non-residents," Molina says.

Cornering the Market
One way for foreigners can avoid these higher domestic prices is to arrive in Argentina on an Aerolineas Argentinas flight. The company offers a discounted rate on domestic tickets for customers who take their flights from places like New York, London, and Sydney, a move that some have criticized as coercion.

"Aerolineas Argentinas has a monopoly on air travel in the country, and that's not likely to change anytime soon," says Francisco Bachrach of Sintectur Travel in Buenos Aires.

Belgian travel agent Kristof Micholt runs Kristof Travel in Buenos Aires, and specializes in bringing European travel groups to Argentina. He says he's had to significantly raise the prices of his package tours to compensate for the airline increase and that his business, and ultimately Argentina, will suffer as a result.

"This has really affected people's confidence in traveling to Argentina, which wasn't very strong to begin with, because this is still a Third World country," he says. "It's a real embarrassment for us who work hard to promote tourism to this wonderful country."

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