LATAM's JVs Part 1: American Airlines partnership would create the largest US-South America force

Mid-Jan-2016 was a banner period for the oneworld alliance. Latin American powerhouse LATAM Airlines Group tabled plans to forge immunised joint ventures with Europe's IAG Group and American Airlines, upping the competitive stakes between Europe and Latin America, and the US and Latin America.

The tie-up between LATAM and American is not surprising, despite American's relative silence on the issue until the formal announcement of the partnership was made. With an impending open skies agreement between the US and Brazil, American's rival Delta has been trumpeting plans to form a joint venture with its Brazilian partner Gol, and in 2015 United took a stake in Brazil's third largest airline Azul.

If all the requisite approvals are gained, LATAM and American will solidify their leading presence between the US and South America, drive important revenue synergies and, perhaps over the medium term, add new markets between the two regions. However, given the market concentration of American and LATAM, regulators may be expected to seek concessions for the agreement to move forward.