’s ability to retain Brazil’s largest carrier Grupo TAM as a member has diminished following the most recent ruling of Chile’s Tribunal de Defence de la Libre Competencia on the carrier’s planned merger with to form the new Latam Group. In an often overlooked condition to the merger, the tribunal not only said the two airlines cannot be part of two different alliances (Oneworld and Star), but also that Latam cannot be a member of the same alliance as its biggest regional rival, AviancaTaca.
The competition authority said the two big groups cooperating in one alliance was “in no case” possible. And if LAN planned to do so, it must seek the tribunal’s approval, with little chance the decision will be reversed.
But this scenario is moot, LAN CEO Enrique Cueto tells Aviation Week. To the contrary, he points out that he toldCEO Christoph Franz and other Star Alliance executives as recently as June at the annual general assembly in Singapore “that we are not going to be in the same alliance as AviancaTaca.”
AviancaTaca has signed an agreement to join Star and is expected to become a full member next spring, along with Copa Airlines.
Joining forces with AviancaTaca “is strategically not reasonable” for Latam, says Cueto. In addition to the broader competition for transfer traffic, there will be significant antitrust issues in Colombia and Peru. LAN Peru and Taca Peru are the country’s leading two airlines and would have a combined market share of more than 80%, while in Colombia, LAN recently acquired low-fare airline Aires and is in the process of turning it into LAN Colombia, in direct competition withand Star’s other future member in the region, Copa, through its Copa Colombia affiliate.
Cueto nevertheless says Latam will talk to all three alliances and says a decision “is not easy.” He also hints that it is unclear if Star will reconsider AviancaTaca’s application or how that could be accomplished. There has never been a case where one of the three alliances has terminated membership of an airline to make room for another candidate.
However, Cueto also points out that LAN’s existing membership in Oneworld is highly valued, given the links it provides in Miami, Madrid and Sydney.
LAN is not forced to make an immediate alliance decision, given that the tribunal has granted it a two-year grace period to make up its mind. “We will only start working with TAM on alliances once the merger is closed,” Cueto says. Until then, “we are still competitors” with no access to the other airline’s detailed numbers.
Losing TAM will be a blow for Star in Latin America. Varig, formerly Brazil’s largest international carrier, became a member of the group soon after it was set up in 1997, but was lost following its bankruptcy and subsequent acquisition by GOL Linhas Aereas Inteligentes. TAM joined only in 2010.
If TAM leaves, Star has few alternatives in Brazil. TAM’s largest domestic rival, GOL, appears to be moving closer tothrough a proposed cooperation with Aerolineas Argentinas (which is set join the group next year), while startup Azul operates from Viracopos International Airport in Campinas near Sao Paulo, an airport no foreign Star carrier currently serves.