Delta Air Lines and LATAM Airlines have signed their highly anticipated joint venture agreement. The deal promises new levels of interconnectivity when traveling throughout the Americas. While still awaiting regulatory approvals, the joint venture agreement will provide benefits such as codeshare agreements, smoother airport connections, and new frequent flyer and lounge agreements.
The deal was one of the biggest aviation stories of 2019
Delta's acquisition of a stake in LATAM was one of the biggest aviation stories of 2019. While the deal made sense for Delta, significantly ramping up its presence in South America, it was the fallout that made folks sit up and take notice.
The formerly up close and personal relationship with bedfellow American Airlines crashed to Arctic levels of frostiness overnight. American Airlines immediately stopped selling tickets on LATAM and went knocking on GOL's door.
LATAM also quit the oneworld alliance. That took a while to formalize, LATAM officially exiting that marital bed only recently. But LATAM didn't stay footloose and fancy-free for long, with both it and Delta signing on the dotted line this week.
Pandemic and travel downturn means celebrations are muted
The pandemic and subsequent collapse in travel demand have put the brakes on what might have been a big celebration. After all, Delta picked up a strategic presence in South America and got to sock it to their jilted competitor, American Airlines. However, both LATAM and Delta are striking a restrained tone following the signing this week.
"Late last year, we set out to build the leading strategic alliance in Latin America together with LATAM, and while the industry landscape has changed, our commitment to this joint venture is as strong as ever," said Ed Bastian, CEO of Delta Air Lines in a statement provided to Simple Flying.
"Even as our carriers contend with the impact of COVID-19 on our business and take steps to protect the safety of our customers and employees, we are also building the airline alliance we know they'll want to fly in the future."
The joint venture promises benefits for passengers of both airlines
While both LATAM and Delta Air Lines have curtailed their international flying into each other's zones, it's the future possibilities that arouse interest right now.
Schedules will be coordinated to allow quicker transfers at each airline's hubs. Delta is moving across to terminal 3 at São Paulo–Guarulhos International Airport to be with LATAM. Conversely, LATAM is moving over to Delta's spaces at both Miami International and New York Kennedy.
The joint venture also opens up a raft of codeshare avenues. When fully up and running, the plan is for LATAM to codeshare on 70 plus onward routes in the United States and Delta to codeshare on 50 plus onward routes in South America. The deal means both LATAM and Delta will have the largest market share on five of the six biggest routes between the USA and South America.
A big win for Delta and a blow for American Airlines
The deal must be a bitter pill for American Airlines. That airline had made a name for itself operating services between North and South America, commanding a large share of the market.
The joint venture between LATAM and Delta is also a big blow for oneworld. The airline alliance, once the global gold standard, now has two big spaces in its coverage - South America and the southern half of Africa.
However, the deal furthers marks the ascendancy of Delta Air Lines. Through its careful acquisition of strategic stakes in other airlines and a customer service overhaul, the Atlanta based airline has in a generation transformed itself from an underperforming US carrier to a global player with a premium reputation. Now LATAM can ride on its tailwinds.