chileno777, you are making a mistake here. Domestic Fares are ruled by the gob. But international Fares are Free so each company can rules their own fares.
And LAN Argentina have been approved to fly many international routes science 2006, Madrid, Rome, mexico, JFK, etc, almost 17 international routes which the company can fly when they want. The problem is that some of those routes have very low yields and strong competitors. Madrid Has Aerolineas and Iberia (casually a Oneworld company) with 4 flights a day, and Air Europa with 1 flight a day (Star alliance company and Aerolineas starting to certificate for that alliance). Lets say, LAN Argentina wants to fly to Madrid they can fly next month and with the fares they want. So the open sky is not a really big problem.
The only issue for LAN in Argentina is they can rotate the aircraft like in Peru or Chile. And that should not be a problem as 99% of the world, even countries where they are experts in open sky policies don't allow that rotation.
On the routes from Argentina to Brazil the new TAM-LAN merge makes the need for LAN Argentina to fly to Brazil useless. The other Argentinean markets like Chile and Peru are both already well served by other group companies like LAN Chile and LAN Peru. So no real expansion on those markets. And on the Argentina-Chile market there is a free frequency agreement, so LAN Chile and LAN Argentina can expand their frequencies as they want.
Unions are rigid? Yes, but if you are a big company you need to start to deal with unions. Argentina is the first place were unions are strong. They will learn how to deal with unions. You cant be a big airline and pretend your crews to fly 6 days on, 1 off for peanuts.
As you see most of Argentinean - South America market was already served by LAN group Before LAN Argentina start their ops. So to be honest the need for LAN Argentina to expand on those markets are pointless. Maby many people overestimates the Argentinean market for LAN.