The Chaco War was the first major Latin American conflict in which aircraft were used. This aerial war carried a large human and materiel cost. At that time, Bolivia possessed one of the greatest aerial forces in the region, however this fact didn't prevent its final defeat. Bolivia lacked the expertise to utilise its aerial forces, and was thus unable to maximise its use of military aviation. Paraguay had a small number of pilots and technicians, all veterans of the revolution of 1922. The 1922 revolution was a brief civil war in which the government and the rebels used aircraft in the operations, and José Félix Estigarribia could be considered an innovator in the military use of aircraft on the continent.
Between July and August 1932, the Paraguayans built a landing strip at the advance base of Isla Poi and deployed a small force of combat aircraft for reconnaissance purposes, which was practically all the military aircraft which Paraguay possessed. Bolivia's air force was numerically superior, but was limited by the lack of airfields close to the combat zone. Despite this disavantage, the Bolivian Army Air Corps was able to conduct attacks in a relatively effective manner.
Lieutenant Colonel Bernardino Bilbao Rioja took charge of the Bolivian Air Corps in the Chaco and initiated the operations in July 1932, concentrating his forces on the primary base of Villa Montes, out of an advanced base in Muñoz, nowadays Fort General Díaz, in Paraguayan territory.
In July 1932, the Bolivians deployed three Vickers Vespa combat aircraft, three Breguet XIX bombers, and three Vickers Type 143 fighters from their forward airfields. By early 1933, the Bolivian army had acquired a consignment of 20 CW-14 Osprey. Paraguay ordered seven Potez 25s through the French military mission, the aircraft arriving on October 1928. Even before the final delivery, one Potez was lost when, while still crated, it was accidentally dropped overboard during the trans-shipping operation in Montevideo, Uruguay. The seventh Potez 25 was replaced by the French company in 1932. Intensive training from 1928 to 1931 resulted in 25 pilots and 18 maintenance personnel ready for operating the aircraft. The First Squadron of Bombing and Reconnaissance was established by the beginning of the war, made up of the seven Potez 25s and two Wibault 73. At least ten Curtiss P-6 Hawk fighters bought by Bolivia were delivered between December 1932 and March 1935. The Bolivian army was familiar with the Hawks since a 1928 demonstration carried out in La Paz by no other than Jimmy Doolittle, who later tried to take off a float-fitted Hawk from Lake Titicaca without success. The fighter of choice for the Paraguayan air branch was the Fiat CR.20, acquired through the Italian legation. Five aircraft were delivered in April 1933. The warplanes were declared operational on 25 May 1933, and arrived to the front the next day.