I recently flew LAN from Santiago to Punta Arenas via Puerto Montt on an Airbus 319 . The flight was completetly full on the first leg, pretty empty on the second. It is all economy and very tight. On the way back (from Mount Pleasant on a 320) the whole flight was perhaps half full. The best seats are, naturally enough, the bulkhead and the second row of emergency exit. Sandwiches and drinks (including beer and wine) were offered on both legs. LAN has no domestic lounges, but there is a lounge that accepts Diners and other cards in Santiago (and one in Punta Arenas that opens only very rarely according to LAN staff at the airport).

The Punta Arenas area itself has few points of interest, aside from two Penguin parks and a 19th century fort. It has a so-called Zona Franca that seems to import mainly from Argentina. The principal tourist destination is Puerto Natales and Torres del Paine National Park, as well as some areas to the south of Punta Arenas. The best car rental is Alamo; the agent there claims internet rates are much cheaper than what is locally available. You could rent a car at the airport and drive directly north to Puerto Natales without missing too much.