LATAM Acquisition – How Delta Shook The Aviation Industry In 2019

In September, Delta Air Lines shook up the aviation industry with the announcement of a partnership with LATAM. Delta said it would take a 20% stake in the South American airline group. Delta’s move to increase its presence in South America set off several reactions and changed the aviation scene in a noticeable way in 2019.

LATAM A350
New opportunities await the LATAM/Delta partnership. Photo: Brian Bukowski (BriYYZ) via Wikimedia

“This transformative partnership with LATAM will bring together our leading global brands, enabling us to provide the very best service and reliability for travelers to, from and throughout the Americas. Our people, customers, owners and communities will all benefit from this exciting platform for future growth.” -Ed Bastian, Delta’s Chief Executive Officer

Partnership details

Officially born in 2012 through the joint operations of LAN and TAM, LATAM has bases throughout South America. US carrier Delta sees great value in connecting with LATAM’s reach throughout the continent.

Advertisement

The details of the agreement are as follows:

Advertisement
  • Delta will invest $1.9 billion for 20% of LATAM.
  • Delta is also investing $350 million to “support the establishment of the strategic partnership”.
  • The airline will acquire four Airbus A350 aircraft from LATAM. Furthermore, it will takeover LATAM’s commitment to purchase 10 additional A350 aircraft set for delivery between 2020 and 2025.
  • Delta will have representation on LATAM’s Board of Directors

New codeshare agreement

LATAM Airlines Peru, LATAM Airlines Colombia, and LATAM Airlines Ecuador recently signed new codeshare agreements with Delta. This agreement will give passengers flying from Peru, Colombia, and Ecuador the ability to connect through to as many as 74 destinations in the United States and Canada. Beginning in the first quarter of 2020, this agreement will extend to other countries in South America, including Chile and Brazil during 2020.

The two airlines are also working to introduce reciprocity for both lounge access and their respective frequent flyer programs.
Delta A350
Delta is one of the airlines to watch in 2020. Photo: Delta

How Delta stirred things up

LATAM leaving oneworld. The Delta acquisition meant a number of things for LATAM. Along with the acquisition announcement, LATAM announced that it would leave the oneworld alliance within the year. However, an early December press release noted that the airline was reviewing an earlier departure date and “will communicate any change in due course”.

Advertisement

Ending the partnership with American Airlines. Cozying up to Delta – a US rival to American Airlines means the ending of LATAM’s codeshares with American. This is effective from February 1st, 2020.

For now, LATAM will maintain its bilateral agreements with most oneworld alliance members, so that members can continue to access route networks, lounges, as well as collect and redeem LATAM frequent flyer miles.

American Airlines looks for a new South American partner. The US carrier is reportedly now in talks with Brazilian airline GOL. The two parties are looking to form a partnership that could see them take more market share in South America. GOL Linhas Aereas, more commonly known as GOL, announced the end of its partnership with Delta Air Lines shortly after the LATAM partnership announcement.

Interestingly, the airline insists that the talks with GOL were not necessarily a result of the LATAM exit from oneworld, nor were they indicative of GOL joining the alliance.

American Airlines
American Airlines is a oneworld alliance member while its US rival Delta is with SkyTeam. Naturally, its agreements with LATAM had to end after the LATAM-Delta deal. Photo: American Airlines

What happened next?

American Airlines increases flights to South America. Quite soon after the partnership announcement in September, American decided to up its presence to South America by increasing its services out of Miami International. The target cities were Lima (Peru), Santiago (Chile), and São Paulo (Brazil).
Qatar expands LATAM partnership. The Middle Eastern carrier says:
The bilateral codeshare will provide Qatar Airways passengers with connections to destinations throughout Brazil and South America including Rio de Janeiro, Brasilia, Curitiba, Lima and Bogota to name a few.”
This move came just a few weeks after the Delta-LATAM announcement in September.
latam-south-america
LATAM’s plans to work with IAG are now over. Photo: LATAM

Conclusion

It’s been quite a year for Delta. And it wasn’t limited to its deal with LATAM. This year Delta has also made some noticeable waves with its joint ventures involving Virgin Atlantic and WestJet. In fact, the US carrier almost shook things up on the European continent with the intention of taking a share of Italian carrier Alitalia.

We would love to know what you think about all of this. Will these multinational, inter-airline agreements and partnerships reduce competition and drive up prices? Or will they offer passengers better connectivity and mutual recognition of status and benefits? Let us know by leaving a comment!

Advertisement

1
Leave a Reply

newest oldest most voted
Richard

As a frequent flyer with Delta and most of my flights are in South America I hope this can happen this year with codeshare agreements. Delta only flies to the biggest cities in South America not to the mid-sized cities there.