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LAN Colombia and TAM Joining oneworld Alliance: Analysis

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LAN Colombia and TAM Joining oneworld Alliance: Analysis

LAN Colombia and TAM Joining oneworld Alliance: Analysis
October 02
09:23 2013

MIAMI — LAN Colombia is the newest member of the oneworld alliance, formally joining earlier this week on Monday. Regional partner TAM is set to join up on March 31, 2014. Technically both are the same airline, being owned by parent company LATAM Airlines Group. The addition of both represents a virtual takeover of the continent by the alliance, which has made a number of crucial inroads elsewhere in the world already this year.

LAN Airlines is not a stranger to oneworld, having been a full member since 2000. However its passenger airline regional affiliates such as LAN Peru and LAN Argentina have been gradually added into the alliance through the years. LAN Colombia was the last of those regional affiliates to be added.

Though expected, TAM will leave its present affiliation with Star Alliance on March 30, 2014. TAM had been a part of the Star Alliance since May 2010. The LAN/TAM merger was required by Chilean authorities to drop one of the two alliances. The choice to drop Star and go full steam ahead with oneworld is likely a product of two things: American Airlines, and Brazil.

First, American Airlines—a long time member of oneworld—was a big reason (if not THE reason) that LAN went with the alliance right out of the gate in 2000. American holds the best overall route network to South America (SA) of the US-based carriers. And they hold Miami (MIA), a city uniquely placed to handle both southbound long-haul feeder traffic and connections to long-haul flights elsewhere in the world.  As our own Vinay Bhaskara puts it, “he who holds Miami holds the keys to the US-South America kingdom.”

Second is Brazil, which is soon to have an open skies relationship with the US. The new arrangement will open up the wide world of joint ventures (JV) between LATAM and US carriers. Keeping in mind that American holds the double advantage of having both the best overall route network to SA from the US and the best possible hub (MIA), LATAM would be foolish to have chosen anyone else. Look for a likely JV between the two in the not too distant future.

While oneworld may have the clear number one position, Star Alliance isn’t terribly far behind. Even with the departure of TAM the alliance still has United, which falls into a reasonably close second behind AA. But more importantly Star continues to hold on to COPA, which has been rapidly expanding. They also have Avianca but the carrier specializes in O&D traffic to and from Colombia, thereby not playing a significant role.

Skyteam, however, remains a distant third. Delta is the major player in the alliance for US-South America but still does not manage a significant presence. Delta does maintain a good codeshare relationship with Brazilian low-cost-carrier GOL, which will help for feeder traffic, but otherwise does not have much.

The addition of LATAM to oneworld caps an already successful year, and marks the second big inroad to solidify regions in the past six months. The alliance managed to snag extra-premium Gulf-region carrier Qatar, set to join on October 30th. Until then none of the Big Three Gulf carriers—comprised of Qatar, Etihad, and Emirates—had hooked up with any alliance. The addition also managed to snag oneworld its third Skytrax-rated five star airline, joining Malaysia and Cathay Pacific.

 

 

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