Delta’s purchase of a 20% stake in South America’s LATAM is one of the smartest and most gutsy moves we’ve seen in aviation this year. As well as taking on a number of the airline’s A350s, Delta’s intervention also pushed LATAM to leave the oneworld alliance. With long-standing rival Qatar Airways a key player in oneworld and a stakeholder in LATAM, we ask, how will Qatar be affected by this bold move?
A shot across the bow?
Without doubt, part of the reason Delta chose to invest in LATAM was a shot across the bow at Qatar. The relationship between Delta and Qatar is one of the most publicly prickly in all of the aviation world. Since 2015, Delta has been leading the charge to prevent Middle Eastern airlines from launching new services to the US, a campaign that has largely fallen on deaf ears in the White House.
Over the years, the dispute between Qatar and Delta has been really quite personal. Qatar’s CEO is noted by View From The Wing to have said that Delta “flies crap airplanes” and to have deliberately launched services between Doha and Atlanta to irritate the US airline.
But Qatar isn’t the only protagonist of the row here. Back in 2017, Delta’s scathing attack on Akbar al Baker’s airline involved a 15-minute promotional video that, at times, was nothing short of xenophobic. Splicing in quotes from al Baker, showing him in Arab clothing and looking somewhat sinister, Delta even lobbed in the issue of 9/11 as part of the argument, something that has nothing to do with subsidies or routes at all.
Clearly, there’s no love lost between these two airlines. Although Delta’s investment in LATAM might also be good from a business point of view, you can imagine Ed Bastian was having a hearty chuckle at the likely reaction in the Qatar camp to his move.
How will Qatar be impacted?
The biggest bugbear for Qatar will undoubtedly be its current ownership of 10% of LATAM. While the two airlines, Delta and Qatar, could coexist as investors together, their history of vicious spats could end up getting in the way. I can’t see the two CEOs sitting down at LATAM’s boardroom table together, amicably getting on with business.
In terms of ego, al Baker is likely to be less than impressed that Bastian now owns more of LATAM than he does. This could go one of two ways; either al Baker will be licking his wounds and checking his bank balance to see if he can buy a bit more of the South American airline, now wanting to be second to Delta in any way, shape or form.
The other scenario could see the Gulf bigwig throwing all his toys out of the pram and putting his stake in LATAM up for sale. However, this would almost be admitting defeat, so I think it’s unlikely.
On the other hand, there could be some knock on benefits for the Doha based airline. Qatar has, for the longest time, complained about the lack of gate access at Terminal 8 JFK. Should LATAM get kicked off the stand at T8 and sent over to T4 with Delta, this could solve Qatar’s issue in a roundabout way. The Middle East airline has also been very vocal about its intention to leave oneworld; perhaps without LATAM, it will give it one less reason to stay.
The decision by Delta to buddy up with LATAM was nothing short of genius. Despite their standing in Sky Team, Bastian has long been vocal that alliances don’t deliver what they should. Their growing allegiance with alliance-less Virgin Atlantic and now LATAM shows Delta’s strategy for branching out away from formal alliances and into joint ventures and partnerships that will bring to aviation what Star, oneworld and SkyTeam have so far failed to do.
It’s perhaps the most notable acquisition in US aviation since the big mergers of the late noughties. It’s put Delta in an enviable position for the future, and has given its long term enemy Qatar a firm kick in the teeth in the process. The only loser here is GOL, who has been tossed aside like a used wet wipe and is left without a US partner, for now.
What do you think? How will Qatar react to Delta’s investment? Will it be a bad thing for the Middle East carrier? Let us know in the comments.