Delta still plans ‘gateway’ Miami hub with LATAM Airlines partnership

Jul 9, 2020

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Delta Air Lines and LATAM Airlines are moving forward their plans for a broad pan-American partnership that includes a new “gateway hub” in Miami even as the industry continues to weather through the coronavirus pandemic.

Atlanta-based Delta plans to add at least 20 new U.S. domestic departures from Miami International Airport (MIA) under its proposed joint venture with LATAM, the carriers said in their application to the Department of Transportation on July 8. The new flights would include both added frequencies on existing routes as well as new routes to “hubs and top corporate travel destinations.”

The airlines did not provide a timeline for the expanded Miami service citing the crisis. The additional flights are on top of Delta’s pre-COVID-19 schedule in Miami that averaged 24 daily departures in 2019.

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Delta and LATAM’s plans to grow under their new pact are difficult to envision today. Both airlines have culled schedules dramatically as a result of the pandemic, with LATAM even taking the drastic step to restructure under Chapter 11 bankruptcy.

In addition, most travel between the U.S. and South America is on hold owing to border restrictions in most South American countries.

Delta does not plan any flights in the market in July, according to Cirium schedules. LATAM plans to fly just three routes between Santiago, Chile (SCL) and Los Angeles (LAX) and Miami, and São Paulo Guarulhos (GRU) and Miami.

Delta and LATAM’s proposed tie up would allow them to coordinate operations between the U.S. and South America. For example, they could jointly schedule flights and sell tickets, share revenues and expenses, and double up on other joint functions.

Related: LATAM Airlines hopes to speed Delta partnership through bankruptcy restructuring

The carriers tout the partnership as having big consumer benefits as well. Travelers could see as much as $54 million in annual airfare savings between the U.S. and South America as a result of the joint venture, according to the carriers’ application. Much of this would come from additional competition enabled by a united Delta and LATAM.

The pact also includes reciprocal frequent flyer and lounge benefits for Delta and LATAM travelers. Some of these were implemented prior to the outbreak of the coronavirus, but more are expected under a joint venture.

Delta has similar partnerships with Aeromexico; Air France, KLM and Virgin Atlantic Airways; Korean Air; and Virgin Australia. It is also seeking a joint venture with WestJet in Canada.

Related: A country-by-country guide to coronavirus recovery

“Together with LATAM, Delta has the resources and vision to make Miami its hub of the Americas and beyond,” Delta and LATAM said in their application. They plan to offer a travelers an alternative to American Airlines, which has a long-standing hub at the airport.

American and LATAM were previously partners and had sought their own joint venture prior to the unveiling of LATAM’s deal with Delta last September. In addition, American is the largest carrier by passenger numbers between the U.S. and South America.

Delta has already indicated some of its Miami route ambitions. In January, it unveiled plans to add service between the South Florida airport and Orlando (MCO), Raleigh-Durham (RDU), Salt Lake City (SLC) and Tampa (TPA) later this year. Those plans are on hold as a result of the pandemic.

Related: Delta Air Lines begins Miami build up with 4 new routes

In addition to a Miami hub, Delta and LATAM plan to add at least nine new routes between the U.S. and South America under the pact. While they did not say what these could be, the application does emphasize connections between their respective hubs, including LATAM’s bases in Bogotá (BOG), Lima (LIM), São Paulo Guarulhos and Santiago.

LATAM has said that it hopes to accelerate approval of the joint venture as part of its bankruptcy. However, to date there has been no move on this. LATAM has secured additional funding to bridge the crisis as well as returned at least 23 jets to their owners.

Separately on Thursday, LATAM indicated that it would include its Brazilian operation in its bankruptcy restructuring. The airline had previously excluded its subsidiaries in Argentina, Brazil and Paraguay, though it closed its Argentine affiliate in June.

Related: Delta stands by new partner LATAM, despite bankruptcy

Aircrafts of Latam airline sit on the tarmac at Santiago International Airport, in Santiago, on April 20, 2020 during the new coronavirus, COVID-19, pandemic. - Latin America's biggest airline, the Brazilian-Chilean group LATAM, announced last Friday that the 95% reduction of its passenger operations announced in April will be extended until May due to the coronavirus crisis, which will cause a deeper impact than expected. (Photo by MARTIN BERNETTI / AFP) (Photo by MARTIN BERNETTI/AFP via Getty Images)
LATAM Airlines aircraft stored at the Santiago airport due to the coronavirus pandemic in April 2020. (Photo by MARTIN BERNETTI/AFP via Getty Images)

 

“We have the utmost confidence in the LATAM team, and remain firmly committed to our partnership, which will be important when we rebuild our international network in the recovery,” said Delta CEO Ed Bastian told staff in May.

Bastian comments came even as Delta faces the likelihood of losing the $1.9 billion it used to purchase a 20% equity stake in LATAM in December. Delta faces a similar loss as part of Aeromexico’s bankruptcy restructuring.

In recent years, U.S. authorities have typically taken their time approving new joint ventures. Delta and WestJet’s proposed tie up is still pending nearly two years after their initial application in October 2018.

Related: LATAM Airlines suspends Argentina unit, ending its Miami-Buenos Aires route

Featured image by Alberto Riva/TPG.

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