The Argentine Market for Navigation Aids and Air Traffic Control Equipment
Summary
This report reviews the development of the air traffic management (ATM) sector in Argentina, including ground navigation aids and highlights potential opportunities for U.S. exporters.
The aviation industry in Argentina comes under the jurisdiction and management of Argentine Air Force’s Air Regions Command. The Secretary of Transportation also plays an important role, primarily in issuing commercial air transport regulations and approvals. Regarding flight safety, by law, the Argentine Air Force (AAF) has sole responsibility to provide technical and operational infrastructure for commercial and private operators including air traffic control, landing and navigational aids, communications, meteorology reports and fire fighting services.
This sector is expected to grow at ten percent per year for the foreseable future and total air passenger traffic is expected to reach 17.5 million by the year 2010.
Presently, there are 15 domestic and three international air routes operational in Argentina. There are 25 airlines that have regular scheduled flights to Argentina. Latin American airlines lead the way with 13, followed by Europe with seven, the United States with three, one from Malysia and one from South Africa.
Argentina has 35 major civil airports, with one international hub: Ministro Pistarini Airport at Ezeiza, in greater Buenos Aires. Aeroparque Jorge Newbery, Buenos Aires’s domestic airport, also serves a few international flights, primarily to Uruguay. Ezeiza airport, with a capacity of five million passengers per year, is the largest airport in the country handling about 75 percent of international passenger traffic.
Argentina has signed bilateral aviation agreements with more than 50 nations including the United States. The Argentine government is beginning to open the aviation sector to foreign carriers. LAN Chile began operations in Argentina in June 2005 servicing six domestic destinations. LAN plans to expand services internationally. This regional airline integration process will be carefully monitored by the government given the current difficulties that Aerolineas Argentinas, the national flag carrier under Spanish ownership, is facing.
Based on the traffic growth projections to 2010, Argentina plans to invest USD 85 million over the next five years in constructing and upgrading the country’s ATM systems. The Argentine government has budgeted, by Law, USD 85 million for this purpose.
Aviation Safety in Argentina
On July 15, 2002, the FAA assessed the Government of Argentina’s civil aviation authority as a Category 2 – not in compliance with international aviation safety standards set by the International Civil Aviation Organization (ICAO). Before that, Argentina was rated at Category 1.
FAA specialists have been advising the AAF on procedures to follow to to bring the country back in Category 1, which is a high priority for the Argentine Government.
Market Overview
European and American companies supplied most ATM equipment and services in place. European firms are the leaders in terms of market share and technological penetration. American companies, currently capturing about 30 percent of the market depending on the types of systems, had the largest share of the market until the mid 1980s. Strong European competition coupled with the progressive buyout of several traditional American manufacturers by European firms have reduced the U.S.’s market share.
Major procurements in the ATM sector are mainly carried out through open or limited international competitive bidding, while the AAF’s Air Regions Command makes final purchase decisions after being approved by the MoD. There are virtually no local producers of this type of equipment but competition from third country suppliers is fierce
The general condition of ground navaids is fair, with exclusive maintenance being performed by the AAF. The AFTN message system is obsolete as well as the radar data and communications recorders.
Regarding meteorology, the AAF has only one operational radar based at Ezeiza, with a 200 NM range.
Air Traffic Management
The Argentine Air Force is the agency in charge of defining the air space radar needs, with supervision from the Ministry of Defense. Since the signing of Decree 1407 in 2004, the government of Argentina has established the legal framework to upgrade the current radar network in country. The goal is to have unified control of all air terminals and airways in Argentina by the year 2010. In 2004 the Argentine Congress allocated 236 million pesos to the AAF for the funding of this improvement.
One of the objectives stated in the Decree is to “comply with current international commitments” which could be interpreted as the government’s desire to regain Category 1 ratingfrom the FAA. Other objectives include reducing the number of illegal flights in Argentina, optimizing the use of airspace, providing efficient responses to emergency situations, and increasing aerospace safety and security. Specifically, the Decree calls for an ambitious surveillance network consisting of nearly 70 radar sensors that will cover approximately 90 percent of Argentina’s airspace. Currently, Buenos Aires city International Airport at Ezeiza is the only traffic control center which can directly access the other four existing radars. The other control centers depend on local or secondary radars which are now outdated. In country ATM is currently provided by with two area control centers (located in Merlo and Ezeiza, Province of Buenos Aires), one approach control center in Cordoba, 44 airport air traffic control towers, four radar stations with 2-D radars, 16 satellite stations, 65 VOR/DME beacons, 42 ILS, 32 advanced VHF ground stations, 43 NDB beacons and dozens of digital microwave as well as AM links.
One of the most recent improvements has been an upgrade with Lockheed-Martin Skyline equipment to the existing aging ATM installed by Thomson at Ezeiza in the seventies.
Air accidents in Argentina
Since May of 1960, there have been 137 air accidents in Argentina. The majority of these involve general aviation aircraft. The cause of most crashes is equipment failure, bad weather conditions and pilot error, in that order. Air traffic controllers direct 850 aircraft on average per day.
Airports
Argentina has inventoried a total of 1,702 landing strips, of which 1,473 are considered to be of minimal use. The country has a network of more than 416 airfields. Of these, about 140 have permanent (concrete or asphalt) surface runways. Only one has a runway longer than 3,659 m (2.20 mi.); 31 have runways from 2,440 to 3,659 m (1.5 to 2.20 mi.); and 326 have runways of from 1,220 to 2,439 m (0.75 to 1.5 mi.). Altogether about 200 airfields can handle general aviation aircraft and feeder airline flights. With the exception of Ezeiza and Jorge Newbery Airports in Buenos Aires, none of these airfields handle a significant volume of traffic.
Only 11 Argentine airports are currently capable of handling international jet flights: Ezeiza and Jorge Newbery in the City of Buenos Aires, Córdoba (Pajas Blancas), Jujuy, Resistencia, Rosario (Fisherton), Río Gallegos, San Carlos de Bariloche, Corrientes, Salta and Ushuaia. Ezeiza, Aeroparque and Cordoba are the the busiest cargo airports. To a lesser extent, importers and exporters may fly goods into El Plumerillo outside of Mendoza.
General (business) Aviation
Considering that Argentina is a country with a vast geographical spance equivalent to the U.S., East of the Mississippi, business aviation has a lot of room to go. Many general aviation aircraft owners do not overhaul their planes in Argentina. Companies in Fort Lauderdale and Miami generally do the maintenance. According to the Argentine Air Force registry, there are 2134 aircraft that can be used for business aviation.
Ground Based Avionics
Following the open skies policy implemented in the mid 1990s, the Argentine airline industry has undergone dramatic changes. Deregulation resulted in an airline industry boom. At its peak, nine airlines flew the skies of Argentina. All of them scrambled to expand their aircraft fleet in anticipation of direct flights to Europe and the U.S. In 1999 the industry began to decline due to the local economic crisis and aggravated by the September 11, 2001 terrorist attacks in the United States. As the economy continues to recuperate, passenger and cargo air traffic is picking up and the airline industry is recovering.
Another driving force in the avionics market is advanced technology products including low-visibility approach systems to replace existing instrument landing systems and low altitude satellite-based area navigation systems. Argentina vows to adhere to emerging trends and upgrade air traffic control infrastructure to be compatible with the International Civil Aviation Organization (ICAO). In general, navigation equipment accounts for about 50 percent of the avionics market. Communications is approximately 20 percent and surveillance is about 30 percent. Integrated systems grew strongly, totaling 15 percent of the air transport avionics market.
Airborne Avionics
Owners of general aviation aircraft are generally inclined to invest in avionics, cockpit and cabin electronics systems that translate into increased security. Decisions on what to buy are based on the recommendation of the pilots.
Competitive Situation
The navigation aids market in Argentina is very competitive. Companies from France, Italy, Israel, Russia and the UK compete in this market on a joint public/private sector basis. Despite the advanced technology and vast experience of U.S. firms, Argentina has proven to be a difficult market. The Malvinas/Falkland war in 1982 and prior to that, the Humphrey-Kennedy ammendment that banned U.S. sales of security and defense products until 1983, opened the door to European suppliers. U.S. firms should not become discouraged since American products are known for their reliability and their affordable maintenance costs. Those that make a long-term commitment stand to gain potentially lucrative contracts.
U.S. firms have an excellent reputation in the area of technology transfer and they should highlight this aspect when bidding on projects. This is a major consideration these days, given the Argentine government’s focus on developing a stronger local industry.
The commercial aircraft market in Argentina has been dominated by the U.S. and Canada. Airbus successfully challenges the U.S. share of the commercial market but, nevertheless, a large portion of the avionics equipment installed on Airbus aircraft originates from American manufacturers. In 2004, the U.S. supplied about 70 percent of the airborne avionics equipment. All domestic airlines look for reliable and reputable firms when purchasing avionics equipment. Product and service quality is the most important purchasing factor, since reliability has become a key issue for avionics end-users. Ability to upgrade is also a determining factor since most of the fleet is quite old and avionics technologies advance rapidly. Avionics firms will need to provide complete service packages to airlines, including contract maintenance. Some of the suppliers present in this market are:
VHF omni directional range systems: Thales (France)
Short range terminal systems: Westinghouse (U.S.), Thomson (France), Alenia (Italy)
Long range air route radar systems: Westinghouse (U.S.)
Instrument Landing System (ILS): ASII (U.S.), Normac (Norway)
Market Access
To contribute to the improvement of air safety, the importation of modern navigational aids –both ground based and airborne- are classified as capital goods, and have been exempted from import duties. No decision has been made as to whether the exemption will be renewed. There are no non-tariff barriers to the sale of U.S. aviation or avionics products in Argentina. Argentine end-users are quite loyal to existing suppliers, so it is crucial to establish a solid relationship with one to pursue any new system or project. Historical buying patterns are also key.
Sales of aviation equipment are typically made with the assistance of a well-connected agent or representative. The importance of finding an effective agent or consultant cannot be over-emphasized, and the appointment should only be done after carefuldue diligence. We recommend interested U.S. firms make use of the Embassy's Commercial Section for assistance in identifying potential agents or consultants.
Import Market
U.S. companies are generally very competitive in ATM systems, telecommunications and information technologies for aerospace applications. U.S. equipment and service suppliers should find significant export opportunities in a number of upcoming ATM projects, such as the Air Space Control System. Additionally, one third of existing ILS and 40 percent of the VOR/DMEs must be replaced in the next five years.
End Users
The general aviation fleet is composed of U.S.-made civil aircraft but Airbus has made great inroads with commercial airlines. The primary end-user for ground-based avionics is the Comando de Regiones Aereas, under the AAF. The major airborne avionics end-users are domestic airlines as well as owners of general aviation aircraft.
Best Sales Prospects
Almost all airborne and ground-based avionics equipment should have good sales prospects in Argentina. Communications: ground controller-pilot data link communications (CPDLC), SATCOM, Next-General Air-Ground Communications System (NEXCOM); navigation: GPS, WAAS, LAAS; surveillance: Addressed Automatic Dependent Surveillance Broadcast (ADS-B); Airborne Avionics: GSP/WAAL/LAAS, Cockpit Display of Traffic Information (CDTI), TCAS, FIS, Digital Radios, MMD, In-flight entertainment (IFEs).
Local end-users prefer genuine parts made by the original equipment manufacturer. However, when there is a significant price differencial, parts made by subcontractors with certificate of compliance (COC) are selected.
Domestic Production
There is virtually no domestic manufacturing of these products. One exception will be INVAP (Investigación Aplicada S. E.) that has a contract with the AAF to manufacture 11 RSMA secondary radars. A handful of small firms are only able to supply products for lower end equipment, such as power supplies, wireless communication equipment, etc.
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Regions:
WH;Western Hemisphere;South America;Latin America;IADB
