The new joint business agreement between International Airlines Group (IAG) and LATAM Airlines Group (LATAM) on flights between Europe and South America was widely anticipated. However, LATAM has pulled off a coup in simultaneously signing similar agreements not only with IAG, but also with oneworld's biggest member - American Airlines. IAG/LATAM would together serve more than 100 destinations in South America and 87 in Europe.
IAG announced the revenue-sharing agreement between British Airways, Iberia and LATAM on 14-Jan-2016. It is another example of what is loosely referred to as a joint venture (JV), under which commercial cooperation on chosen routes moves beyond codesharing to a deeper level. The agreement also encompasses reciprocal FFP recognition.
As JVs typically involve the coordination of schedules and pricing, they require regulatory approval in order to avoid the charge of collusion, which would otherwise be illegal. IAG and LATAM expect this could take 12 to 18 months, so implementation of the JV may not take place until the winter 2017/2018 season. If approved (and if without too onerous regulatory concessions), the JV will strengthen the oneworld members on Europe-South America. Star Alliance and SkyTeam (capacity leader in this market) will need to find responses.
To access CAPA Premium Analysis you need a CAPA Membership
Your window into the latest insights
CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.
Big picture strategic view
Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.
The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.
Customise your Alerts
CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.
I'm very impressed by the factual and detailed analysis CAPA is always doing.- CEO, Airline Member
Phone: +61 2 9241 3200 | Email: firstname.lastname@example.org