LAN

Following on from our story of yesterday about Qatar Airways joining oneworld, we cab report that LAN Colombia, a company related to LATAM Airlines Group SA (LAN Airlines), will become an affiliate member of oneworld.   LAN Airlines itself has been a full member of oneworld since 2000.  All other passenger airline affiliates of LAN Airlines have joined oneworld as affiliate members subsequently – LAN Argentina, LAN Ecuador and LAN Peru – apart from TAM, which will transition to oneworld from Star Alliance in 2014.
Oneworld
This will bring all of the components of Latin America’s leading airline group into the same global airline alliance.
 
Through its oneworld partnership with British Airways, Iberia and American Airlines, LAN Colombia will be able to offer its customers the most popular gateways for Latin American travelers, in their Miami, New York, Madrid and London Heathrow hubs.

 
From its first flights on Tuesday, 1 October 2013, LAN Colombia will offer oneworld’s full range of services and benefits.

Its cardholders of the LANPASS frequent flyer programme will enjoy privileges whenever they fly with any oneworld member airline – including the ability to earn and redeem awards and earn tier status points when flying on any oneworld airline partner.

Yesterday we discussed British Airways lack of routes to South America and why many in the industry feel that now is the time for the airline to significantly increase its footprint.

BritishAirwaysChileSo, just where in South America might British Airways fly to? Well, let’s start with where we believe they won’t fly.

Despite its huge oil reserves, Venezuela has become something of a basket case, both economically and politically, so British Airways will not be flying to Caracas we don’t feel. The economies and populations of Bolivia, Ecuador, Guyana, Paraguay and Uruguay are still far too small so we don’t think that British Airways will fly to any of them anytime soon.

That leaves Argentina & Brazil, which British Airways already fly to, plus Chile, Peru & Columbia.

Argentina is really all about Buenos Aires and, as a result, we don’t see British Airways flying to any other destinations within the country.

TAM 767Brazil is the largest country in South America with by far the biggest economy and population. Although its economic growth has slowed, it is at least still growing, as is trade and tourism with the UK. The World Cup in 2014 and Olympics in 2016 are also sure to further increase traffic. Sao Paulo & Rio are Brazil’s dominant cities however and rather than risk new destinations, we feel that British Airways will simply increase capacity to Sao Paulo & Rio, either with increased frequencies or bigger aircraft (perhaps even introducing the A380 to Sao Paulo in time for the World Cup) and using TAM to generate increased feeder traffic.

Within South America, Chile, Peru & Columbia are possibly the most successful economies at present; all 3 are stable, outward looking and committed to free trade. Together with Mexico, they form the Pacific Alliance, the region’s newest and most promising trading bloc, committed to reducing trade barriers such as restrictions on airlines & flights.

Of these 3 countries, Chile, the most economically advanced, is probably the most likely new destination for British Airways, especially as oneworld partner LAN has its base in the capital, Santiago de Chile.

The economy of Columbia is also very strong and, with its relative proximity to the USA, British Airways’ key market,  we feel that Bogota would be the second new destination for British Airways within South America.

British Airways PeruFinally, Peru, like Chile, is a long flight from the UK but has a strong and growing economy and, far more so than both Chile and Columbia, has very strong appeal to the leisure market. We therefore rate Lima as the third most likely destination within South America to receive British Airways flights.

Whether any of these predictions come to fruition only time will tell. One slight caveat is that all 3 routes will only become practical once British Airways has the 787 in its fleet. As none have yet been delivered, and the first 7 have been set aside to replace existing, ageing 767s, it may not be until late 2014 or even 2015 that the airline can even consider new routes to South America.

787 Dreamliner

787 Dreamliner

 

 

 

 

 

British Airways received a huge boost this week when LATAM, Latin America’s largest airline, announced that it had chosen oneworld over Star Alliance or Skyteam. LATAM was formed in 2012 after Chile’s Lan completed the takeover of Brazil’s TAM. As with both British Airways / Iberia & Air France / KLM, both LAN & TAM are set to retain their identity within a single holding company. British Airways First Class

Before the merger LAN had already been a member of oneworld while TAM was signed up with Star Alliance; once the dominant force, Star Alliance will now control a reduced 16% of the Latin American market, while oneworld will have a near 30% share.

From both the oneworld and British Airways point of view, this development finally gives both organisations access to the dominant, fast growing and critically important Brazilian market. Although British Airways has tradionally been no more than a bit player in the Latin American market, recent years have seen strong growth in passenger traffic between Heathrow and both Rio & Sao Paolo.  With access to a local partner, British Airways can now expect to significantly expand its reach to secondary Brazilian destinations that do not warrant their own dedicated service.  Of perhaps equal importance, it will allow British Airways to compete with both Air France / KLM (Skyteam) & Lufthansa (Star Alliance) on a far more level playing field than before.

However, other than a single, additonal route to  Buenos Aires in Argentina, British Airways has pretty much decided to leave South America to its IAG partner Iberia. With the current travails being endured by its Spanish partner however, it would come as no surprise if British Airways was to launch new routes in the near future. The most likely new destination must surely be Santiago de Chile; not only is it the headquarters and home base for LAN, it also currently lacks any direct flights to the UK (both LAN & Iberia currently operate between Madrid & Santiago). Having secured additional slots at Heathrow following the 2012 takeover of bmi, and with the airline set to take delivery of its fuel efficient Boeing 787 Dreamliners later this year, it must surely only be a matter of time.

British Airways 787 Dreamliner

British Airways 787 Dreamliner