JetSmart Airlines has criticized the process conducted by the Civil Aeronautics Board (JAC) for the allocation of 13 frequencies between Santiago and Lima, which ultimately went to LATAM. The auction for the frequencies on the route connecting the two capitals took place on October 23rd. Out of the 13 operations in the competition, 10 ended up with LATAM, and 3 were awarded to Sky. JetSmart previously had 14 frequencies on this route, of which 9 expired and were part of the auction. The remaining five frequencies will expire in April 2024.
Before the auction, Estuardo Ortiz, CEO of JetSmart, sent a letter to the JAC, stating that the agency «has full authority to prevent harm to competition on the route.» Additionally, the executive criticized that it would further strengthen the dominant position of other players in the market, negatively affecting consumer choices.
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The economic offers presented in the auction exceeded the amounts awarded in the 2017 and 2018 processes. This, however, was not sufficient for the current process. The JAC decided to redistribute the frequencies, excluding JetSmart. Consequently, LATAM added 10 new frequencies to the 46 it already had. Meanwhile, SKY, which originally had 20 frequencies, was awarded 3, although two of them may be declared abandoned and revoked.
According to JetSmart, this has led to LATAM now having 66.6% of the operations, while SKY holds 27%, and JetSmart has just 5.7% of the existing frequencies. The airline argues that this disrupts the national aviation market and harms passengers. The company has conveyed to the JAC that «this process should never have taken place, as there is currently a pending inquiry before the Tribunal for the Defense of Free Competition regarding the appropriateness of disparities among national market players, given that two out of three airlines have indefinite frequencies. This makes the market inequitable, protectionist, and resistant to increased competition. Despite this, the authority has chosen to persist with this contest, even when the results issued by the TDLC may contradict the process.»
The airline urgently calls for a review of the auction model and the identification of essential elements to ensure competition in the market, as well as to prevent an inequitable system for industry participants. «Not only should the frequency auction model be reviewed. More importantly, Chile should address the underlying issue and engage in discussions with Peru. They must completely eliminate flight frequency restrictions between both countries and turn to open skies,» the airline stated. JetSmart concludes by stating that it will pursue all necessary means to have the state invalidate this auction process.
