Will LATAM cut ties with Alaska Air following Delta Air Lines’ recent acquisition of a 20% stake in the Chilean giant? Delta’s Ed Bastian strikes at the heart of the "global alliance", but to what end?
Delta’s announcement (26/09/19) of its spending $1.9Bn for a bite of LATAM has spread fissures across the industry. As well as knocking American Airlines out of its own venture with the Chilean carrier, Delta’s move is a further one-fingered salute to the concept of the global alliance.
The Atlanta airline can now bolster its growing South American network. Together, Delta Air Lines and LATAM will enjoy the benefits of being Latin America’s primary carriers. Combined, they will serve 435 destinations worldwide and carry more passengers between North America and Latin America than any other partnership, according to Live and Let’s Fly.
In short, Delta and LATAM have much to celebrate. American, meanwhile, licks its wounds.
But with LATAM leaving Oneworld (presumably at the behest of Delta’s Ed Bastian) industry analysts now wonder whether the deal will stymie LATAM’s relationships with its other partners, in particular, Alaska Air. If that happens, Bastian’s MO of stealthy stake grabs could be seen as a threat to the very fabric of inclusive partnerships and alliances.
Alaska Air and LATAM
There is no escaping the truth of the matter: Delta’s recent investment has caused a systemic shock wave. Notwithstanding its throwing mud in the face of American, Delta's move is apt to threaten the partnership LATAM has with Alaska Air.
The two have a codeshare agreement which, while not in the same league as a binding fiscal enterprise, is still relevant to the status quo. Alaska does not belong to any of the three major global alliances, but it cherishes the strategic agreements it enjoys with 17 other airlines.
While not a certainty, it is within the realm of precedent, according to OMAT, that LATAM will be urged by its new partner to do away with its ties with Alaska. Doing so for the sake, perhaps, of preserving a unification of Delta: avoiding the restraints and influence of airlines not associated with the Atlanta wolf.
Alaska Air and Delta Air Lines
However, LATAM may also drop its links with Alaska Air because of the tepid relationship between the latter and Delta. Albeit, once more, on the say-so of Bastian.
A once beefy relationship between Delta and Alaska was the talk of the town. But, by 2016, the two had fallen out in a quite spectacular fashion. That was due in the most part to Delta’s decision two years previously to secure a hub in Alaska’s backyard. Delta’s hub at Seattle was its way of tapping into trans-Pacific custom.
Delta’s new routes meant that it was now competing head-to-head with Alaska Air. It was biting into routes that were the staple of the SeaTac giant and making no friends along the way.
Tensions between the two carriers heightened, leading, inevitably, to the pair divorcing and closing down their frequent flier and codeshare initiatives.
Beyond LATAM
Delta’s deal certainly spells trouble ahead for global alliances. Ed Bastian has his cards on the table and will no doubt continue to challenge airline partnerships during his own race to expand. In his opinion, alliances are dead in the water and fail to provide member airlines and their customers with sufficient benefits. His commitment even to SkyTeam appears to be waning.
It is tempting to believe that his company will be increasingly steered by relationships and part-ownership of individual airlines. The problem is some of the partnerships dented by Bastian are well-entrenched; some even politically sensitive.
We have contacted LATAM and Air Alaska for comment and are waiting for a reply.