US major, American Airlines and South America’s LATAM Airlines Group are applying for regulatory approval to enter into a joint business to better serve their customers. The deal, which is subject to securing regulatory approvals, will offer American and LATAM customers an expanded network with coordinated schedules providing seamless travel on the airlines’ flights between the United States and Canada and six South American countries - Brazil, Chile, Colombia, Paraguay, Peru and Uruguay.
If approved, the arrangement will enhance the existing strategic partnership between American and LATAM allowing closer commercial cooperation that will provide significant benefits for consumers, including an expanded network offering, with access to more routes, frequencies and destinations.
The airlines plan to file for antitrust immunity from the US Department of Transportation and appropriate local authorities in South America. LATAM and American launched their first codeshare in 1999 and became oneworld partners when LAN Chile joined the alliance in 2000.
“When great airlines can work together, customers win with more choices for when and how they travel,” said Doug Parker, Chairman and Chief Executive Officer, American Airlines, who noted that travellers will gain access to more frequent and convenient schedule options than either carrier would be able to offer individually.
“In the eight countries covered by this new joint business agreement, customers will have access to nearly 330 destinations, including 100 more South American destinations than American’s network serves today,” he added.
Through the proposed joint business, American will provide LATAM customers greater access to cities in the US and Canada via American’s key hubs in Miami, New York, Dallas/Fort Worth and Los Angeles. LATAM’s hubs in Sao Paulo, Santiago, Brasilia, Lima and Bogota will give American customers enhanced network connectivity to cities in South America.
“We’re bringing the United States, Canada and South America closer together than ever before, by providing both American and LATAM customers even greater benefits. This is a positive step in offering them the best connecting network in North and South America and it increases the possibility of adding new destinations to our networks in the future,” said Enrique Cueto, Chief Executive Officer, LATAM Airlines Group.
Alongside maximising connectivity between North and South America, the partnership will also create opportunities for new direct services to currently underserved destinations and additional frequencies on some existing routes.
LATAM’s expanded partnership activities will also extend beyond the Americas with a similar joint business deal with International Airlines Group (IAG) members British Airways and Iberia on flights between Europe and South America. The airlines plan to seek approval from the appropriate competition authorities in South America and will inform the regulatory authorities in the European Union.
Under the joint business, the airlines plan to expand their codeshare arrangements on flights between and within Europe and South America, significantly increasing the number of destinations that the airlines can offer customers. Like the American agreement this will also strengthen the oneworld alliance in which all the airlines are members.
Customers would be able to travel more easily on the airlines’ combined route network which would serve more than 100 destinations in South America and 87 destinations in Europe. By working together to provide enhanced links for connecting passengers the airlines would expand customer choice via integrated networks, new non-stop routes, additional frequencies on existing routes and combined fares.
“We already have a close commercial relationship with LATAM as part of oneworld and we look forward to enhancing the relationship further. This joint business would benefit customers by providing them with easier journeys to more destinations with better aligned schedules and increased frequencies. This would boost both tourism and business travel between South America and Europe,” said Willie Walsh, Chief Executive Officer, IAG.
It is anticipated that regulatory approval for the two joint businesses could take between 12 and 18 months and would certainly face opposition from rival carriers on both sides of the Atlantic.
Established in 2012, LATAM Airlines Group is the holding company resulting from the merger of LAN Airlines and TAM Airlines, the largest carriers of Chile and Brazil, respectively and, combined, the biggest carrier in Latin America with a fleet of over 300 aircraft and 53,000 employees. Having operated as separate airlines since the merger, LATAM introduced a new logo in August last year that will take over the existing LAN and TAM brands and the unified look, including a revised livery willbe introduced over the coming three years, gradually becoming visible starting in 2016 with branding at airports, aircraft, uniforms, commercial offices, loyalty programs, web pages, among others.