5 things you need to know about the Delta-LATAM joint venture

In a nondescript building adorned with the LATAM logo sits a handful of Delta Air Lines employees — an arrangement that would've been unthinkable just a few years ago.

Earlier this month, Delta officially inaugurated its new South Florida offices, which are now in LATAM Cargo's Miami headquarters.

There you'll find about 10 full-time Delta employees, some of whom are working closely with LATAM to build out a joint-venture partnership between the two carriers.

The walls feature pictures of Delta and LATAM airplanes, and the space is so new that one of the conference rooms hasn't even been built yet.

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ZACH GRIFF/THE POINTS GUY

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The Delta employees working from this office even have a front-row view of LATAM's cargo operations, watching as some of the airline's freighters load and unload their goods before their next mission.

Every few minutes, you might even glimpse an American Airlines jet taking off in the distance — a somewhat ironic sight considering the circumstances.

Until mid-2020, the South American conglomerate LATAM was a member of the Oneworld frequent flyer alliance and a partner with American Airlines.

However, Delta wooed the airline away from its U.S. rival back in late 2019, in a move that shocked many industry observers. It acquired a 20% ownership stake in LATAM and also filed plans to begin a joint venture partnership (that includes profit sharing and schedule coordination) between the U.S. and South America.

That joint venture was approved in late September, and both Delta and LATAM have raced to implement it.

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Now that we're nine months into the tie-up, Delta and LATAM invited me to check out their new digs and learn more about their nascent joint venture. Here's what I learned.

Delta bolsters presence in key region

From Delta's perspective, the joint venture was designed to quickly fill a noticeable gap in the airline's global route map, Perry Cantarutti, senior vice president of alliances for Delta, said.

"When we looked at the world, that was one part of the world where we were not very well covered," Cantarutti told TPG.

Before the tie-up, Delta was far from being the market leader in flights between the U.S. and South America. It offered just 122 flights on average a week between the two regions. Cirium schedules show that this was well below the 475 and 200 weekly flights American Airlines and United Airlines offered in 2019, respectively.

Nowadays, "We are together the No. 1 player between North and South America," Cantarutti was proud to share.

The joint venture already connects more than 200 North American destinations served by Delta to the more than 120 South American destinations served by LATAM.

Also, at least nine new routes were teased as part of the pact, and five of them were formally announced, including:

• Orlando-Bogota, Colombia (starts July 1)
• Los Angeles-Sao Paulo (starts Aug. 1)
• Miami-Medellin, Colombia (starts Oct. 29)
• New York-Rio de Janeiro (starts Dec. 16)
• Atlanta-Cartagena, Colombia(starts Dec. 22)

Together with some additional frequencies on existing routes, this translates to a 75% capacity increase since the pact was implemented — an impressive feat for such a new partnership.

Miami is becoming a 'gateway hub'

When the joint venture was announced, Delta promised to turn Miami into a "gateway hub."

Since then, Delta and LATAM have grown the Miami operation by nearly 40% more flights, according to Luciano Macagno, Delta's managing director of Latin America, the Caribbean and South Florida.

From Miami, Delta has launched or recently increased service to Boston, Los Angeles, Orlando, Salt Lake City and Washington, D.C.

Additional domestic connectivity may be in the works. However, Delta's existing domestic flights now cover most of the demand for travelers headed to or from Miami and those connecting beyond Miami into South America (and vice versa), Macagno said.

For instance, that short Orlando flight — a rare point-to-point route for Delta — is largely about funneling connections through Miami.

In addition to the new routes, Delta is upgrading its Miami terminal to better support the LATAM joint venture. This includes a more streamlined connecting experience when landing from an international destination, as well as adding Spanish signage across the entire facility.

Delta's operations are co-located with LATAM's in Miami (and a handful of other key airports). That's a big improvement for travelers who used to connect from LATAM to American — a process that required a ton of walking and maneuvering around the airport.

The airline is also modernizing and expanding its Miami Sky Club to accommodate a total of 320 flyers with more than 12,000 square feet. Delta is even starting to insource its ground handling in Miami, too.

Although it's not necessarily specific to Miami, Delta unveiled a Spanish version of its mobile app last week, a project that was accelerated due to the joint venture. Portuguese support is coming soon, according to Cantarutti.

Delta fills a bigger gap than American

When Delta purchased a stake in LATAM, it sent shockwaves throughout the aviation industry. The news upended some long-standing alliances throughout the hemisphere, perhaps most notably the deep-seated tie-up between American and LATAM.

While some industry insiders might've been surprised by the move, it makes total sense from LATAM's perspective: Delta fills a bigger gap than American, providing access to more one-stop destinations for flyers.

"We're very excited about the access to the interior of the U.S. and their gateways," Marty St. George, chief commercial officer at LATAM, said in an interview.

Relative to American's operation in Miami (the key connecting city under the American-LATAM pact), Delta's Atlanta hub offers "many, many more destinations," St. George said. "The thing I say to my team is that we will be selling customers to cities you have never heard of in your entire life."

There is a "very, very long tail of demand to and from South America," which accounts for roughly 20% of the traffic between the two continents, St. George added. The Delta joint venture enables LATAM to serve these cities with one-stop itineraries that wouldn't have been possible with American.

While LATAM isn't as big in Miami — the key U.S. gateway to South America — as it was with access to American's big hub there, St. George isn't worried. "We can manage Miami on our own ... we have a lot of service there anyway," he said.

SkyTeam membership could be coming

Delta and LATAM have already added reciprocal loyalty benefits, giving frequent travelers access to perks, such as lounge access, regardless of which airline they fly.

You can now earn and redeem miles on either airline, too.

But as exciting as the Delta partnership is, LATAM was once a key member of the Oneworld frequent flyer alliance. Membership in a global airline alliance helps boost connectivity and provides access to a broader network of customers. LATAM might consider joining Delta's alliance, SkyTeam.

"Our focus right now is Delta ... I think the concept of SkyTeam is a little bit in the future," St. George said.

Pressed further, he added that the "experience working with Delta has been fantastic so far. They're a great poster child for what the possible benefit of the SkyTeam would be."

Reading between the lines, I wouldn't be surprised if LATAM's long-term plan includes membership in SkyTeam.

For now, though, it maintains a limited partnership with two Oneworld airlines, Iberia and Qantas, which help bolster its connectivity to Europe and Australia, respectively.

Metal neutrality is the goal

So far, executives at both airlines are happy with the progress that they've made in just under a year.

In the future, Delta and LATAM will continue working toward "metal neutrality," Alain Bellemare, Delta's president-international, said. This basically means that fares, loyalty benefits and the passenger experience will be aligned between both airlines.

The executive teams at both carriers meet once a quarter to go over long-term plans. They gather in cities that are commercially important to the joint venture, such as Atlanta, Miami and Lima, Peru.

While more route announcements and flyer benefits are in the works, both carriers are also doubling down on building their brands and awareness across the continents; this is especially true for Delta, which has historically been weak in South America.

Such measures include an advertising campaign and customer outreach across the continent. "We find it's important because people don't know what Delta is as a credit card or a faucet," Cantarutti said.

Fast forward a few years, and I bet South American flyers will know Delta as the airline that's partnered with LATAM — and vice versa in the U.S.