Delta swings from market weakness to strength in Latin America

A surprise $1.9b investment by Delta in LATAM Airlines Group is likely to fire up competition in South America as the weakest US carrier in the region joins up with the strongest homegrown player. Atlanta-based Delta had long struggled to get a better foothold in the Latin American market, lagging United and American Airlines, whose longtime partnership with LATAM gave it a comfortable lead. With the Delta deal, that reigning power couple has split. Dominance in Latin America — an air travel market expected to double in the next decade — has been fiercely disputed by the top three U.S. carriers for good reason. Eight of every 10 passengers in Latin America traveling outside the region are bound for North America, according to industry group ALTA. Following its breakup with Chile-based LATAM last month, American Airlines quickly announced new flights next year from Miami to Chile and Peru — destinations where the two had been coordinating their routes with regulatory approval. “This shows you that the (American-LATAM) partnership ultimately ended up undermining supply,” said Carlos Ozores, a principal at consulting company ICF. “There was no competition because these were two carriers that coordinated their fares and worked as one.” American said it had “expanded routes and lowered prices” as a result of its coordination with LATAM in Chile and Peru. The combined strength of LATAM and American ultimately doomed their partnership, as Chile’s top court ruled in May that they could not expand their cooperation on travel to the United States. By contrast, Delta’s historic weakness in the region has become a distinct advantage, allowing it to leapfrog competitors without facing as much regulatory scrutiny. Story has more background.<br/>