SAO PAULO — Some five years in to the merger process and after two years of internal planning and deliberations LAN and TAM are set to rebrand as LATAM Airlines. This move, announced today in Sao Paulo and set to begin in earnest in 2016, will see the two large partners and also their smaller, affiliate partners establish a common livery, marketing strategy and passenger experience.
Enrique Cueto, CEO of Grupo LATAM Airlines explained the vision of the merger, “The idea was to bring together a large group which would allow us to show and share our level of quality but not just in the domestic market but to become a global company, to reach different hubs not just in South America but around the world.” And now that vision will be realized with the launch of the new, single brand.
Jerome Cadier, CMO Groupo LATAM, described the decision and process as pioneering, noting that in other mergers one of the two brands has been chosen; in the case of LAN and TAM the two legacy brands will be retired in favor of the new, common brand which will be built up going forward. It is also expected to help the company be more responsive to competitive demands in the industry, “Having two brands made us slower because we had to adapt things to each one of the brands.”
This rebranding is the second such in the Latin America market in recent years; Avianca/Taca was the other. This approach is in stark contrast to the way European carriers have dealt with their mergers. IAG, Air France/KLM and the Lufthansa Group have all kept their brands separate. Perhaps that is a cultural challenge. In explaining the need for a single brand the LATAM executives noted that the Brazilians would have trusted the TAM brand more while the Spanish-speaking passengers would favor the LAN brand. Choosing a new one was key to a successful consolidation. With similarly strong national loyalty in Europe convincing the various countries to give up the branding of their flag carriers would be a significant challenge.
The single brand is arguably the beginning of the final phase of the merger integration, though there is still much to be done on that front. Because of regulations in the seven countries where the carriers are based the individual operations will remain independent for the foreseeable future. But the ticket purchase process will become integrated on a single platform. As Cadier explained, “In the future you’re going to buy a LATAM ticket and fly on any aircraft. We haven’t unified our systems yet. And without that we don’t have a seamless operation. This is going to happen next year.” The PSS integration on to the Sabre platform is expected at the end of 2016 or early 2016.
Even before the unification of the ticket process, however, there will be other factors which are unified. LATAM executives acknowledge that the travel experience and certain policies vary for customers; the goal is to have those differences ironed out at the beginning of the rebranding process, starting early in 2016. A new, unified website will launch prior to the unified booking system. Passengers will start to have the single experience even before the systems are fully ready to handle such, with much of the difference hidden in the back end.
The LATAM Airlines rebranding effort is expected to cost $30-40 million USD (excluding marketing & communications) over a 3-4 year period, with 80-90% of that spent on repainting aircraft and supplying employees with new uniforms. The paint effort will happen over an extended timeline, mostly based on maintenance windows for the existing fleet. At some point new deliveries will arrive in the new livery but that is still 12-18 months away due to lead times from the air framers. And, in the interim, there will also be fleet integration efforts to allocate new aircraft where they are most appropriate to serve new capacity demands.
The ultimate goal is for LATAM to “Create a culture where it will be just one.” Passengers should have the feeling that “I am LATAM’s customer and I will be treated by them as just one,” according to Cadier. There is a lot more to that than just paint on the planes and new uniforms. And it will all begin starting early next year.