LATAM Airlines Exits The oneworld Alliance

As of May 1st, LATAM Airlines has departed the oneworld alliance. This leaves oneworld without a South American member. However, LATAM is not yet joining another alliance. Instead, the airline is continuing to build a new partnership with Delta Air Lines.

LATAMA350 — The LATAM A350 is two years old. Photo: Tom Boon - Simple Flying

LATAM departs oneworld– how we got here

In 2019, Delta Air Lines and LATAM announced a massive new partnership. This came after years of LATAM working with American Airlines on a relationship that kept experiencing regulatory hurdles. Since the carrier sought to deepen relations with a US airline, management had to look elsewhere for a new collaboration. While United had Avianca and Copa, Delta only had Aerolineas Argentinas and GOL. Neither are strong players in the continent. As a result, LATAM was an appealing partner for Delta.

As part of the deal, Delta took over some of LATAM's existing and future Airbus A350 aircraft while investing $1.9 billion into the carrier for a 20% equity stake. However, with Delta's stake, it was clear that the airline would depart the oneworld alliance. But, it would not yet join another alliance.

Departing an alliance takes time and is a careful unraveling of partnerships and reciprocal benefits. While LATAM will no longer be a partner with American Airlines, it will continue to work with some other airlines that are oneworld members– such as British Airways and Qantas. Severing the ties with American, however, was incredibly important since both Delta and American are major rivals in the United States.

Airbus A350s currently fly cargo-only flights to Shanghai via Seoul. Photo: Jay Singh/Simple Flying

The airline drama builds

There are few industries in the world as reactive as the airline industry. Once Delta and LATAM announced their partnership, American and its partners got to work. IAG announced it was purchasing Air Europa, and, as a result, Air Europa will depart Skyteam. Then, American and IAG teamed up to launch new flights from Boston– a city where Delta has been expanding significantly in recent years. And American Airlines upped its South American schedules before announcing a new partnership with GOL.

American and Delta Aircraft — US airlines are taking different approaches with limiting capacity onboard. Photo: Getty Images

That was not all for oneworld. The alliance recruited Alaska Airlines, and American announced the launch of two new long-haul routes out of Seattle– a Delta hub. In response, Delta also announced it would start a new route to London to compete with American out of Seattle.

Will LATAM join Skyteam?

LATAM has no interest in joining Skyteam at this time. In the future, it may be open to the opportunity. Delta has, in recent years, preferred to deepen ties with carriers through partnerships both inside and outside the alliance. Skyteam already has a South American carrier in Aerolineas Argentinas. But, the Argentinian flag carrier's network is not as extensive as LATAM's, which has hubs in Argentina, Peru, Colombia, Chile, Brazil, Ecuador, and Paraguay.

Aerolineas Argentinas — The flag carrier of Argentina is a member of the Skyteam alliance. Photo: Airbus

Delta will have significant sway over how LATAM broadens its partnerships in the future. While American Airlines and British Airways are proud members of the oneworld alliance, Delta has not been terribly enthusiastic about being a Skyteam member. The Atlanta-based carrier could push Air France, KLM, and Virgin Atlantic toward a new partnership with LATAM leading the South American airline to end its ties with IAG without necessarily asking LATAM To join Skyteam.

Do you think LATAM made the right decision to partner with Delta? Do you believe LATAM will join Skyteam? Let us know in the comments!