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- Lan AirlinesS.A.
Americo Vespucio 901, Renca
- Main hub
- Santiago International Airport
- Business model
- Full Service Carrier
- Domestic | International
- Joined Alliance
- Association Membership
- Codeshare Partners
TAM Airlines (Paraguay)
Based in Santiago, LAN Airlines is the national airline of Chile. One of the largest airlines in Latin America, LAN Airlines uses a fleet of Boeing and Airbus narrow and wide-body aircraft and operates an extensive network within Central and South America as well as Australia, the Pacific, North America and Europe. LAN is a prominent player in South American aviation. It is one of the most consistently profitable airlines in the industry, and has subsidiaries in Argentina, Peru, Ecuador and a cargo subsidiary. LAN is a member of the oneworld alliance.
Location of LAN Airlines main hub (Santiago International Airport)
LAN Airlines share price
843 total articles
83 total articles
Latin America’s powerhouse LATAM Airlines Group believes it has turned a corner in its Brazilian operations after enduring weak margin conditions within Brazil’s domestic environment since the merger of LAN and TAM officially closed a little over a year ago.
The company’s overall 3Q2013 results were somewhat buoyed by a 19% improvement in Brazilian domestic unit revenues year-on-year as LATAM slashed its supply within Brazil by 6% during the quarter. For the 9M2013 time period LATAM’s ASKs within Brazil contracted by 9%.
While the rebound within Brazil in commendable LATAM still faces challenges with respect to the devaluing of the BRL, which fell 13% during 3Q2013 against the USD. LATAM is attempting to blunt the effects of currency fluctuations through hedging schemes and transitioning TAM’s debt to the LATAM balance sheet, which is denominated in the USD.
Aerolineas Argentinas is focusing on further expansion in the short-haul market, where it continues to benefit from protectionism. The government-owned carrier has committed to purchasing 20 additional 737-800s, growing a narrowbody fleet which has already been renewed since renationalisation in 2008.
The flag carrier has incurred stiff losses since renationalisation despite trying to improve its position through network adjustments, fleet renewal and new partnerships including membership of SkyTeam. Aerolineas continues to work on improving its highly unprofitable long-haul operation but the carrier is now primarily focusing growth in the domestic and – to a lesser extent – the regional international sectors.
Domestically Aerolineas benefits from a lack of competition as Argentina is not open to new entrants including low-cost carriers. Its only main domestic competitor, LAN Argentina, has been unable to expand and has had to overcome numerous challenges, including a recent attempt to evict the carrier from its maintenance base which could have forced it to withdraw from the domestic market.
Oneworld has increased its presence in Colombia, Latin America’s third largest market, with LAN Colombia formally joining as an affiliate member on 1-Oct-2013. LAN Colombia is the second largest domestic carrier in Colombia after Star Alliance member Avianca and has a small but growing international operation.
Colombia is an important growth market but the impact of adding a Brazilian member is much more significant. Oneworld has set a 31-Mar-2014 ascension date for Brazil’s largest carrier TAM, which is now part of the LATAM Airlines Group along with LAN Colombia and four other LAN-branded carriers that are already oneworld members.
With LAN Colombia and subsequently TAM, oneworld will become the largest alliance in Latin America with a projected 27% share of seat capacity. Star will still have a respectable 16% share, which could grow to about 18% based on probable new members, and will remain the dominant alliance in Colombia.
Avianca has cut back significantly in Ecuador’s domestic market as it focuses on domestic growth in Colombia and Peru. The group’s Ecuadorean subsidiary, AeroGal, has redeployed capacity to the international market, which it sees as more profitable following the opening of a new airport at the capital Quito.
Rival airline group LATAM however has been expanding rapidly in the Ecuadorean domestic market. In 2Q2013, Ecuador was the fastest growing domestic market for LATAM but the slowest domestic market for Avianca.
Government-owned Ecuadorean carrier TAME also has been expanding, leading to a further drop in market share for Avianca. The Ecuadorean market also saw in 2Q2013 the entry of a fourth domestic carrier in Linea Aerea Cuencana.
A year into their historic merger LAN and TAM – now LATAM Airlines Group – are continuing a network optimisation concentrated largely in its Brazilian domestic operations; but tweaks are also occurring in its international services as the company works within the dedicated LATAM operations and with its oneworld partners on network optimisation. At the same time the scale created by the tie-up is allowing LATAM to shed older, less fuel efficient widebodies from the combined fleet.
One subtle shift in LATAM’s North American operations is the ending of a four year stint on flights between its Lima hub and San Francisco in Mar-2014. The move appears to be less about weak performance on the route and more geared towards freeing up some widebodies for operation by TAM as well as perhaps coordinating more closely with LATAM’s oneworld partner American in Los Angeles, which is introducing new service from Los Angeles to Sao Paulo in Nov-2013.
New Zealand has negotiated 12 bilateral agreements in the past 18 months as the government moves to implement its new International Air Transport Policy announced in Aug-2012. This places emphasis on establishing open skies agreements with key markets even if the offer is not reciprocated. To that end the government has negotiated the new or expanded bilateral agreements with the United Arab Emirates, Qatar, Kuwait, China, Taiwan, Japan, Indonesia, Brazil, Paraguay, Uruguay, French Polynesia and Iceland.
Negotiations have also been held recently with Papua New Guinea while talks with Vietnam and Thailand are planned in the near future.
New Zealand Ministry of Transport GM of Aviation and Maritime, Bruce Johnson said at the CAPA Australia Pacific Aviation Summit in Sydney on 07-Aug-2013 that the policy has a large focus on capacity and a strong commitment to open skies agreements where possible. “But [the policy] has also gone further than that and said where open skies can’t be agreed then we will agree to whatever is good for New Zealand. And if that means we don’t get reciprocity, then so be it.”
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