AviancaTaca and Copa Airlines Join Star Alliance

Date : 06/21/2012 @ 11:41AM
Source : Dow Jones News
Stock : Delta Air Lines, Inc. (DAL)
Quote : 50.08  -1.05 (-2.05%) @ 4:00PM

AviancaTaca and Copa Airlines Join Star Alliance

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   By Doug Cameron 
 

The parents of AviancaTaca and Copa Airlines officially joined the global Star marketing alliance Thursday, marking the latest stage in an ongoing shakeup of partnerships between Latin American and overseas carriers.

The three global alliances--Star, SkyTeam and Oneworld--have been sparring over the past 18 months to gain or retain footholds in Latin America, particularly in Brazil, the region's largest market.

While Star has grabbed two new members and SkyTeam has added a pair of its own, Oneworld is set to emerge as the best-placed with current and potential links between American Airlines and LATAM Airlines, to be formed from the merger of Chile's flagship carrier LAN Airlines SA (LFL, LAN.SN) and Brazil's TAM S/A (TAM, TAMM4.BR).

AviancaTaca's entry into Star forces TAM to depart the group, a requirement of the merger approval laid down by Chilean regulators. LAN is already a member of Oneworld and is expected to retain its allegiance after the merger, but its Brazilian unit--the two airlines will remain separate operating companies--may join at a later date, according to market analysts. LAN and TAM executives have yet to confirm their future alliance membership.

Brazil is viewed as the main prize for the alliances, which market flights to frequent-flyer and corporate clients, and luring TAM would be a huge coup for Oneworld.

Latin America is American Airlines's strongest and most profitable market, and the carrier continues to expand services to the region as it restructures in bankruptcy protection.

American, a unit of AMR Corp. (AAMRQ), is the largest airline for flights between the U.S. and Brazil, with a market share twice that of SkyTeam member Delta Air Lines Inc. (DAL) and United Continental Holdings Inc. (UAL), a key member of Star. Panama-based Copa has long-established links with United's Continental unit and has followed it to Star from the SkyTeam grouping.

TAM ranks second in U.S.-Brazil services, and a combination with American would provide a powerful force ahead of the expected surge in traffic as the Latin American country hosts the World Cup in 2014 and the summer Olympics in 2016.

Tom Horton, AMR's chief executive, said in an interview earlier this year that he was keen to pursue an expanded alliance with LAN. Mr. Horton said in March that LAN and TAM held "heated" discussions over their alliance future. Oneworld was also keen to restore its leadership in the region after the collapse of one member, Mexico's Mexicana.

Write to Doug Cameron at doug.cameron@dowjones.com

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