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(Last updated: 23 May 2008)
Trends and opportunities
The market
After some pressure from the USA in 1999, Argentina started replacing bilateral agreements that regulated international air traffic with open skies agreements. As of 2006, Argentina has agreements with Chile, Spain and USA. These agreements encouraged more airlines to fly to Argentina. However, turmoil in the air transportation industry is threatening these open skies agreements. The government has kept air fares steady in order to keep inflation from rising.
Many airlines are finding it difficult to operate profitably without being allowed to increase prices and they have discontinued routes and cutback on flight frequencies. Near the end of 2006, the government allowed companies to increase air fares by 20 per cent for them to remain in business. The increase is not considered sufficient and companies continue to have problems operating.
The return of middle income tourists will continue to boost the number of trips while the recovery of middle to middle/high income is expected to boost spending more. However, the continued growth is susceptible to economic volatility and price increases that could derail the growth. In outbound tourism, 'work and travel' and 'travel and study' tourism as well as cruise travelling are expected to see further recovery.
Internet transactions remain underdeveloped due to a lack of standardised payment platforms for Internet transactions, and low penetration of credit cards among the Argentinean population. Also, lack of confidence in the treatment of private information deters some consumers who are afraid of fraud.
Sales of airline tickets online account for the highest share of Internet sales within the tourism industry. This is due to direct suppliers investing in their websites in order to avoid paying commissions to travel agents.
Since the economic crisis in 2002 the two major effects were:
- Argentina became less expensive for foreigners.
- Argentines found that travelling abroad was more expensive and thus chose to take holidays within the country.
Consumer demographics
In 2006, over 24 million domestic and outbound trips lasted between four and seven days, representing 56 per cent of the total number of trips, according to the Tourism Secretary. Besides being the largest, this category was also the one to grow the most, especially affected by Easter and winter break. The return of middle to low income class families also boosted growth, preferring shorter trips due to financial constraints.
The first largest group of holiday takers is that of 25-to-34-year-olds, who enjoy high disposable incomes, as they are part of the workforce. 35-to-49-year-old holiday takers form the second greatest percentage, as these are the holiday takers gaining the maximum benefit from their incomes. Older couples with their children away at university are the main visitors to premium destinations such as Patagonia and Iguazu, as they tend to enjoy higher disposable incomes and a certain amount of flexibility enabling them to take advantage of seasonal promotions. The third largest group is 15-to-24-year-old holiday takers who spend their holidays mainly in coastal destinations in the Buenos Aires province.
For 50-to-64-year-old holiday takers the situation is different, as the disposable income of this age group suffered a setback due to the economic crisis that left many unemployed, so these holiday takers have reduced spending power on their holidays. However they are an important age group in the off-peak season and tend to seek out travel bargains. Holiday takers aged over 65 mainly use travel agents to make their travel arrangements and often travel with their neighbourhood association of retirees on trips in the off-peak season.
Visas issued by the Australian Embassy in Argentina (2005-2008)
| Number of visitors* from Argentina to Australia |
| July-June |
2005/06 |
2006/07 |
% change |
2007/08(July-Jan) |
|
4,108 |
4,883 |
18.87% |
3,118 | *Includes ETAs - transit-business visas
Opportunities
While families and couples still are the main demographic profile, many other categories are growing fast. As pointed out before, young people travelling in a group or alone for study or working purposes have become an important and interesting niche. Also, due to the increase in business trips, groups and single executives are also an emerging demographic profile.
Competitive environment
With the stabilisation of the economy and the increase in real wages, along with the expansion of consumer credit, many Argentinians decided to travel to places such as USA and Europe (especially Spain and Italy) in 2007.
During 2007 there were several important promotions done by partnerships among credit card companies, banks and airlines that boosted departures to the US and Europe. For example, Banco Galicia offered its clients sky miles with Aerolineas Argentinas when using a Banco Galicia Visa Card. BBVA Banco Frances offered its clients special discounts on Asatej & Despegar.com tourism packages.
Uruguay remained by far the most popular destination with leisure tourists, particularly for their summer vacations (the most important of the breaks), accounting for 29 per cent of total outbound leisure trips. The second most popular leisure destination was Chile with 773,800 tourists, nearly followed by Brazil with 699,900 leisure visitors.
An increasing niche that has positively affected departures to the UK and the US is the 'work and travel' and language study trips.
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