Brazil-US aviation: open skies as foreign ownership laws relax

The recent ratification of an open skies agreement by Brazil's Senate results in the US airlines arguably gaining unfettered route access to Latin America's largest markets - Brazil, Mexico and Colombia.

Now that the agreement is nearing formal ratification, LATAM Airlines Group and American Airlines can move forward in establishing their immunised joint venture, which in many ways represents a virtual merger. Rivals of those oneworld partners have had ample time to craft a response to the proposed JV, but the ratification of open skies creates a certain level of pressure for LATAM's and American's rivals to ensure they'll have the necessary tools to compete effectively against an entity that could control approximately 54% of the seats between the two countries.

The establishment of open skies with the US could reignite discussion in Brazil about changing foreign ownership laws covering the country's airlines, but 100% full foreign ownership is unlikely to materialise.

Still, a more liberalised perspective in Latin America's largest air travel market could spread to some of the region's more protectionist countries. Chile, which allows 100% foreign ownership of airlines, is not experiencing any detrimental effects from the debut of the ULCC JetSMART in its domestic market during mid-2017.