LATAM’s exit from oneworld: another hit for alliance relevance

The proposed multi-layered agreement between LATAM Airlines Group and Delta Air Lines will have reverberations throughout the airline industry for years to come. LATAM's swift decision to exit the oneworld alliance has interesting and possibly far-reaching implications.

The airline group is one of the largest members of the alliance, and once it severs long-standing ties with oneworld, the alliance will be dominated by American and IAG, joined by other, smaller, airlines that remain in the grouping.

The decision by Latin America's largest airline group to turn independent also results in tectonic shifts in the region. Once LATAM leaves oneworld in late 2020, Brazil's three largest airlines will not have any affiliation with any of the major alliances and a substantial number of seats in the region will be operated by an independent airline.

LATAM's defection from oneworld raises bigger questions about the value of alliances, since achieving network strength increasingly calls for looking outside traditional groupings.

Of course, in LATAM's case there is a sizeable investment by Delta that allows Latin America's largest airline group to strengthen its balance sheet further.