How the LATAM-Delta Partnership Will Shake up the US to South America Market

A Delta A321 at BOS. Photo by Cole McAndrew | AeroNewsX

Back in September, Delta Air Lines sent out a huge announcement of its purchase of a 20% stake in LATAM Airlines, Latin America’s largest airline and the conglomeration of the two former airlines, LAN, and TAM. LATAM was a major Oneworld Alliance partner and a vital codeshare asset with the United States' largest airline, American. This purchase stunned many American Airlines executives.

Now, with control of nearly a quarter of the company, Delta is shifting LATAM’s market strategy to better suit the routes of its partners at SkyTeam. It is unclear whether LATAM intends to join the alliance, as bilateral codeshare agreements outside of major alliances can offer similar benefits, and it currently does not want to make a final decision. Airlines increasingly have been forming bilateral codeshare arrangements outside major alliances. Qantas, for example, a Oneworld member, and a critical South Pacific-Australia partner for American Airlines, said it would retain its codeshare partnership with LATAM despite the carrier's departure from the alliance.

So, what does all of this mean for U.S. airlines and the aviation market in South America? Many aviation business insiders have suggested that American has ignored the impact of the deal. However, American, with its strategic Miami hub, still has the majority of the US to Latin America market while Delta has the smallest market share of the legacy carriers. It is likely that American intends to establish new codeshare agreements to maintain its dominance in the region as well.

A LATAM A320. Photo by LATAM Airlines

The LATAM deal also means that Delta is likely to sell its stake in GOL Airlines based in Brazil as trying to keep ownership of the two would ultimately prove to be a conflict of interest in the bigger picture when it comes to the Brazilian market share.

Whatever the case may be, it will be interesting to see how the Latin American duopoly between American and Delta will play out.

Could we potentially see Delta vying for a hub in Miami, which is unquestionably American's territory? Or potentially will Delta just expand with LATAM on their side of route operations?