Airlines partner through codeshares and alliances, but the closest partnerships are anti-trust immunized revenue-sharing joint ventures. Most countries limit foreign ownership of their airlines, and so these deals which allow coordinating schedules and pricing and sharing revenue usually based on seat capacity represent a work-around.
My own view is that I’d be more than comfortable essentially taking a competitor out of the marketplace (American and British Airways, United and Lufthansa, Delta and Air France among others no longer compete across the Atlantic) if the government itself didn’t institute barriers to entry including those foreign ownership restrictions and offering a property right to incumbent airlines at congested airports for their slots and gates. New entrants cannot get access to places like London’s Heathrow or New York JFK without paying a significant tax to existing players.
Several South American countries have approved the American Airlines joint venture with LATAM, and American has expected to receive approval from the U.S. In a surprising move, the Chilean Supreme Court has overturned the country’s regulatory anti-trust approval of the deal which also includes British Airways citing limited competition and barriers to entry. Presumably with US regulatory approval American and LATAM will move forward with their joint venture excluding US-Chile from the arrangement.
LATAM president Ignacio Cueto says in a statement that the airline is “surprised” by the ruling, calling it a “setback” for the country. The carrier’s executives had previously said they expected the deals to be upheld by the court, following the last-minute appeal against the joint venture by a Chilean tourism association and consumer rights body.
Prior to the appeal, the joint ventures were cleared by Chile’s anti-trust tribunal and had also secured approvals from Brazil, Colombia and Uruguay.
Copyright: artzzz / 123RF Stock Photo
There are plenty of connecting options between Chile and the U.S. It’s possible to connect in Argentina, Brazil, Colombia, Panama, Mexico, and elsewhere. However non-stop travel between the US and Chila outside of American and LATAM are limited.
Delta flies Santiago – Atlanta. United flies Santiago – Houston. The American-LATAM joint venture would have the only non-stops currently in key markets like New York, Miami, and Los Angeles.
In February American had withdrawn its request to the Department of Transportation for approval of the deal so that it could revise and resubmit in light of conditions being imposed by Chile’s regulatory authority. It seems that the South American airline which three years ago entered a deferred prosecution agreement and paid a criminal fine for paying bribes to union officials to accept lower wages must have failed to do the same with the country’s Supreme Court.
(HT: Live and Let’s Fly)
I’m not sure how this deal, or the absence of the deal, will affect the average passenger. American, Delta, United, and Latam already provide nonstops to Chile from US gateway airports. I’m sure that will continue. The only impact of no-deal appears to be on the balance sheets of American and Latam.