"The relationship with American Airlines opened the door for us to show Aerolineas Argentina our strength in the cargo business," says Armando Valdivieso, LanChile's cargo president.
Thomas Silva, head of commercial planning and development for cargo at LanChile, says his airline's familiarity with its oneworld alliance partners will help Aerolineas when negotiating interline and handling agreements with those carriers.
American's links with both carriers laid the foundation for this venture. A year ago, the US Department of Justice approved American's acquisition of an 8.5% equity stake in Aerolineas, which also gave American a management role in the Argentine flag carrier. Then, in April, the US Department of Transportation (DoT) gave preliminary approval and antitrust immunity to American's strategic alliance with LanChile. A month later, LanChile formally joined the oneworld alliance.
The joint venture between LanChile and Aerolineas illustrates the potential for alliances between Latin airlines that share a partnership with a US carrier. Until now, they have mostly paid lip-service to regional co-operation. As more Latin carriers join forces with US airlines, however, they are more likely to view their neighbours as allies than as rivals.
LanChile and Aerolineas have formed a venture called Aerolineas Cargo. Starting in late September, the company will use cargo space on Aerolineas flights to North America and Europe. LanChile will manage all operations, although the carriers own equal shares of the venture.
Typically, Aerolineas has outsourced most of its cargo business, while LanChile produces 30% of its revenue from air cargo, a high proportion by airline standards. LanChile's Valdivieso explains: "Aerolineas was anxious to generate more cargo revenue and was aware of our strength in the cargo market".
Valdivieso says the venture will combine the extensive cargo capacity and route network of Aerolineas with LanChile's air cargo experience. Could this lead to closer ties? LanChile admits that it is talking with Aerolineas about a passenger alliance. Enrique Cueto, LanChile's chief executive, told reporters that his airline, with support from American, is interested in an equity link with Aerolineas and raised the possibility of a share swap.
These events are giving American some regulatory angst in the USA. Both the Justice Department's approval of its Aerolineas stake and the DoT's grant of antitrust immunity are subject to review. Other US carriers are jumping on the cargo venture and talk of cross-ownership as evidence of American's hegemony in the Southern Cone. Delta claims these events undercut American's earlier disavowal of any "tripartite linkage." Delta is urging the DoT to reconsider its antitrust immunity for American and LanChile.
The new Argentina-USA bilateral is unlikely to blunt such complaints, because the pact phases in open skies over four years.
Source: Airline Business
