LATAM-Aerolíneas Argentinas Agreement: The Cold War with Abra Group Is Heating Up
As if it were a giant game of Risk, South America is starting to be divided among the players with the most pieces: LATAM and Aerolíneas Argentinas have agreed on a codeshare scheme that will enable the joint offering of 140 domestic destinations in Brazil, Argentina, Colombia, Peru, and Ecuador. The agreement includes regional connections between their subsidiaries but excludes the long-haul segment.
Just a week after Avianca announced a major expansion of its offerings between Argentina and Colombia, leveraging the fifth freedom rights of its Ecuadorian subsidiary, LATAM responds by adding Aerolíneas’ domestic network, which comfortably leads the Argentine domestic market share. It’s too early to evaluate impacts, but initially, the agreement provides flexibility in regional offerings and a strong position for challenging the Abra Group’s main operator for leadership in South America.
The strategies of the two holdings are similar but have fundamental differences: Avianca has unapologetically adopted a low-cost strategy that has gradually been moderated over time, while LATAM has maintained more of a legacy carrier philosophy, incorporating elements of LCCs. This will be part of a longer analysis that we will address in a separate article, but operational sustainability seems to fall somewhere in between the two business models: global aviation is moving toward a blend where, if all are low-cost, none truly are.
What remains to be seen is what will happen with the agreements that Aerolíneas Argentinas signed with Abra Group and the codeshare agreement with SKY Airline. Considering the results of the Buenos Aires–Bogotá route operated by GOL, it doesn’t seem like abandoning that partnership would be a significant sacrifice. The Cold War between Abra and LATAM for dominance of the subcontinent is thus left wide open. We’ll see what benefits it brings to passengers and the industry.
Responsable English Feed en Aviacionline. Reportero gráfico.
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