Delta and LATAM's joint venture is tentatively approved by DOT
A proposed joint venture between Delta Air Lines and LATAM Airlines has been tentatively cleared by the Department of Transportation, paving the way for the deal to proceed.
Delta and LATAM announced the planned joint venture in 2019, and Delta recommitted to the deal in 2020 even as LATAM entered bankruptcy due to the COVID-19 pandemic.
Although Chilean authorities cleared the deal last fall, the airlines continued to wait for the ruling from U.S. regulators. Airlines must typically receive approval from regulators before enjoying the anti-trust immunity offered by a joint venture. Delta has similar ventures in place with numerous airline partners, including Air France-KLM and Virgin Atlantic.
Still, in the ruling published on Thursday, the DOT attached conditions to its approval, arguing that without them, it found that granting the antitrust immunity could be anti-competitive in the U.S.-South America market.
"The Department proposes the following critical remedies and conditions to address these issues: maintenance of current third-party interline agreements, the removal of exclusivity provisions...a 10-year expiration and re-assessment requirement, and the removal of a capacity constraint clause located in the Joint Venture Agreement, which artificially limits growth during the initial stages of the proposed relationship," the DOT wrote in the filing.
"With these conditions, we have tentatively determined that the alliance is likely to generate public benefits while the U.S.-South America market would remain sufficiently open to existing and new competition."
The ruling is now subjected to a 14-day comment period.
In September 2019, Delta made waves with the shocking announcement it would take a 20% stake in the Latin American carrier, valued at just under $2 billion, and form a joint venture, upending historical alliances in the region. LATAM, which was previously a member of the Oneworld alliance and a partner of American Airlines, left the alliance as part of the announcement.
The two airlines currently offer reciprocal frequent flyer benefits and codeshare on some routes, an arrangement that was expanded in November.
In a statement, Delta celebrated the decision.
"Delta Air Lines and LATAM Airlines Group applaud the U.S. Department of Transportation's tentative decision to approve their Joint Venture," a spokesperson said.
"Once the DOT finalizes its decision, both airlines will work to quickly deliver the consumer benefits approval unlocks, including expanded capacity, increased routing options between the U.S./Canada and South America, superior frequent flyer benefits and shared airport facilities and amenities."
TPG featured card
at Bilt's secure site
Terms & restrictions apply. See rates & fees.
| 1X | Choose to earn up to 1X points on rent and mortgage payments with no transaction fee |
| 2X | Earn 2X points + the option to earn 4% back in Bilt Cash on everyday purchases |
Pros
- Choice to earn up to 1 Bilt Point per dollar spent on rent and mortgage payments
- Elevated everyday earnings with both Bilt Points and the option to earn Bilt Cash
- $400 Bilt Travel Portal hotel credit per year (up to $200 biannually)
- $200 Bilt Cash annually
- Priority Pass membership
- No foreign transaction fees
Cons
- Moderate annual fee
- Designed primarily for members seeking a premium, all-in-one card
- Earn points on housing with no transaction fee
- Choose to earn 4% back in Bilt Cash on everyday spend. Use Bilt Cash to unlock point earnings on rent and mortgage payments with no transaction fee, up to 1X.
- 2X points on everyday spend
- $400 Bilt Travel Hotel credit. Applied twice a year, as $200 statement credits, for qualifying Bilt Travel Portal hotel bookings.
- $200 Bilt Cash (awarded annually). At the end of each calendar year, any Bilt Cash balance over $100 will expire.
- Welcome bonus (subject to approval): 50,000 Bilt Points + Gold Status after spending $4,000 on everyday purchases in the first 90 days + $300 of Bilt Cash.
- Priority Pass ($469/year value). See Guide to Benefits.
- Bilt Point redemptions include airlines, hotels, future rent and mortgage payments, Lyft rides, statement credits, student loan balances, a down payment on a home, and more.