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.
“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
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.
The details of the agreement are as follows:
- 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.
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”.
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.
What happened next?
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!