LATAM will remain unaligned after Delta tie-up, Oneworld exit
LATAM Airlines plans to go it alone once it exits the Oneworld alliance as part of a landmark strategic pact with Delta Air Lines.
The South American airline group will become an unaligned carrier after leaving Oneworld, though it plans to maintain all of its bilateral agreements except the one with American Airlines, said LATAM commercial chief Roberto Alvo during an analyst call on Friday. Alvo is due to take over as CEO of LATAM in April 2020.
However, even as the LATAM-Delta pact promises to reshape the aviation landscape in the Americas, travelers can expect LATAM to continue its partnerships with the likes of British Airways, Qantas Airways and Qatar Airways — at least for the time being.
Related: Delta to take 20% stake in LATAM, which will leave Oneworld Alliance
LATAM's relationship with American will be unwound over the next several months, Alvo said. LAN Chile and American first partnered in 1999, a relationship that continued after LAN Chile merged with Brazil's TAM to become LATAM. LATAM and American also will walk away from their efforts for a joint venture that the carriers have sought since 2016.
Delta will invest $350 million in LATAM to help defray the costs of leaving Oneworld and its American relationship. This is separate from the roughly $1.9 billion the Atlanta-based carrier plans to spend buying a 20% stake in LATAM.
LATAM declined to give specific guidance on its timetable for exiting Oneworld, saying only that it would likely come after it severs its ties to American.
Now, LATAM and Delta hope to establish a codeshare agreement by the year's end, the first step toward a possible full joint-venture that is expected to take up to two years. Such a partnership, if blessed by regulators, would allow the airlines to act as essentially one between the U.S. and certain South American countries.
As a result of the new partnership, Delta will sell its stake in Brazil's Gol and end its multi-year relationship with the carrier.
"We had no choice when the LATAM opportunity presented itself," Bastian said. "Gol really only covers domestic Brazil," while LATAM's network covers nearly all of South America.
Alliances shake up
LATAM's embrace of Delta not only comes at the expense of American, but could be the first in a wave of changes that could disrupt deep-seated airline alliances. Increasingly, more carriers seem open to the "unaligned" stance LATAM intends to take after exiting Oneworld.
"The alliances will eventually lose their importance as airlines continue to grow and adjust their route networks," Cowen analyst Helane Becker said about LATAM's departure from Oneworld in a Friday research note. "This is not the first time an airline moved from one alliance to another, and we don’t expect it to be the last."
Oneworld will lose its only South American member with LATAM's departure. However, as Alvo indicated, travelers can expect business as usual with member carriers except American.
The fact that LATAM does not plan to join the SkyTeam alliance, which Delta helped found in 2000, is notable. While not commented on directly by executives at either carrier, it is just the latest signal of a larger move away from the alliance system that has defined airline partnerships since the 1990s.
Delta CEO Ed Bastian, speaking during the airline's own investor call on Friday, said alliances have not lived up to all of their "promises" in terms of easing touch points between carriers. He cited technology as an example, pointing to disconnects between various reservations systems.
"We are not going to sit around and wait for the alliances to develop the technology... We’re building on a bilateral basis," said Bastian.
Delta is already making such bilateral investments. Unaligned Virgin Atlantic, after forging a strategic partnership with the U.S. carrier in 2014, adopted a reservations system based on the one used by Delta to ensure "seamless experiences" for customers. Additionally, Virgin Atlantic also has forged ties with Air France and KLM, two of Delta's close SkyTeam partners.
Related: Delta, Air France, KLM, Virgin Atlantic Transatlantic Pact Gets Tentative Nod
It is too early to know whether the Delta-LATAM pact will include technological cooperation. What is clear is that the airlines will be working more closely together, especially if the proposed joint venture is approved.
In the meantime, Delta and LATAM are not losing any time implementing their new partnership. A Delta team is headed to LATAM's headquarters in Santiago, Chile, to begin fleshing out the details during the week of Sept. 30, Delta president Glen Hauenstein said on the call.
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
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- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.