American Airlines Investing In South America's JetSMART

Desperation.

So I'm a business traveler on a paid J seat. AA's solution is for me to transfer to a ULCC for my final, intra-South America leg? Not good enough.

There just aren't a whole lot of airlines in Latin America that are worthy of investment. Indigo flips airlines so is happy to see someone invest that might make one of their carriers more stable in the long-term.
The product inconsistency is notable. Latam and AeroMexico are both positioning themselves as much lower cost airlines - perhaps as ULCCs compared to US cost levels - but I would bet that Latam and AeroMexico will remain as ULCCs but with full service type products. Gol is not a full service airline but is very cost efficient.
The bigger takeaway is that Delta-Latam and potentially United and whoever it partners with will be a strategic threat to American and they have to come up with something viable to counter even if it means a multitude of partnerships.

When did AAdvantage stop being the largest loyalty program in the Americas?

Sad that some of the names of the cities on that map are misspelled...

I get the overall point, but LATAM isn’t much more than an LCC product domestically either. I can’t imagine a one class LATAM flight vs a one class JetSMART is all that different except that LATAM has higher costs.

Wait so this where my tax dollars went?

The bailout money that was supposed to keep airlines afloat and feeding their employees.
The money ending up in the pockets of a Private Equity Firm?

Yep CARES act finally made its way back to the pockets of Wall Street.

Since last year LATAM has at least Premium Economy service in all its flights, including domestic ones. Premium Economy in LATAM is pretty similar to intraeuropean business class.

You do realize that this is the same offering LATAM has on their narrow body network (if not worse)?

LATAM has been struggling financially, so this is a good way to try to put more pressure on them (and DL) for daring to run off together. Yes, LATAM has premium class seating/amenities, but most of these segments aren't all that long anyway. And LATAM's fleet is on the old side; not helped by offloading their A350's while still leaning on the same 767's that I flew on back when they were LAN Chile.

Honestly, I think AA is pretending to be a premier airline while running it like a low cost carrier. Maybe not ultimate low cost carrier but low cost. If American could just own what they are I think you’ll see customer satisfaction go up. If people buy a ticket knowing what to expect then customers are happier. I’m not saying ditch first class or premium economy, but let’s just stop the charade that AA is a high class airline. Just own it and make it the best airline in that category. AA could be a fantastic mid-tier airline but they are spending all their time and energy pretending to be something they aren’t.

Neuquén and Ushuaia...Also, AA just announced that is not flying to Manaus anymore.

At least LATAM offered lounges and Oneworld status recognition. This is not an acceptable substitute. AA's money should be going toward setting up a small premium cabin at the front of the aircraft for its connecting business class passengers.

LAN doesn't have a single domestic lounge in Chile. What they provided: priority check in, mess of priority boarding, baggage and complimentary seat selection. Everything onboard is for sale, nothing for free.
So there is absolutely nothing fancy about LATAM domestic that is meaningfully better than it could be with JetSmart.
If AA decides to collaborate with JetSmart the same way it did with LAN in terms of passenger experience it will be all the same: seat selection, baggage + throw in priority boarding for elites.

I really don't get the disappointment. AA had 2 choices: do not provide connectivity (which is hardly convenient for customers right?) or provide it with low-cost SKY or low-cost JetSmart. They do right thing.

I believe United gave up with South America. They hardly have choices so probably it's a right thing to give up for them. In the long run this market could be a key for any US airline with tremendous growth potential. At the moment though... United has nothing worthwhile to invest into. SKY in Chile and that's it. Not worth bothering.

Maybe AA will learn a thing or two from them; acquire Spirit, Frontier, and/or Allegiant; and finally double down on being the airline it has always wanted to be.

AA really wants to be a LCC. Unfortunately, the first C is not possible. This would have been an awesome Spirit partner! (AA execs are really throwing spaghetti against the wall.)

It’s the same economy seat but with a middle blocked.
That’s not premium economy, it’s a very cheap substitute. and it’s very easy to replicate by Jetsmart if they want or it ends up being any kind of product differentiation.

It's not just the middle seat blocking, also the pitch is (much) more generous: 34 inch in PE vs. 28 inch (ouch!) in Economy. These 6 inches are very well noticable ...

Latam is in Chapter 11 bankruptcy in the US and will come out much leaner, just like the big 3 (and their predecessor/merger partners) did.
They fly a fleet of 787s which is why they got rid of their A350s. They kept their 777-300ERs.
Latin America is not going to be a region for premium travel amenities. Partnerships w/ global airlines are about connectivity between more of Latin America and the rest of the world. Latam just happens to also be a global carrier - just not on the scale of American, Delta or United.

Where’d American get the money to invest in another airline?

"(T)here’s something funny about American investing in an airline owned by Frontier’s parent company."

--------------

FYI - Bill Franke, Indigo's founder, was the CEO of America West and hired Doug Parker.

Is not the same. As Andy mentioned the pitch is bigger. Also, you get drinks and snacks for free. And lastly, Jetsmart seats don't recline. Imaging going from Santiago to Lima or Cali in a seat with a pitch of 28 and that doesn't recline. Ouch.

Depending on which American you ask but this statement should cover both.

Money is probably from CARES Act (the airline) which is money printed from your future 2027 taxes (the country).

High-costs, low-class - that’s the AA I know.

Sad for AA. For their South America feed network, they’ve rapidly gone from having this solid, robust, and long-standing partnership with LATAM that looked like it wasn’t going anywhere, to having to pick up the remaining scraps - those LCCs and ULCCs - out of utter desperation, now that there’s no longer another major South American carrier without a US partner. Simply because they were unable to do something to prevent LATAM, who always seemed to be their close friend, from just turning their back on them completely, or at least try to reconcile with LATAM again, given what a mistake this breakup was IMO. Before, the full-service airlines in South America were perfectly balanced, with Copa and Avianca in Star Alliance (with UA), the LATAM Group in Oneworld (with AA) and Aerolíneas Argentinas in Skyteam (with DL). And Azul’s partnership with United worked well. Now, it seems like Skyteam’s network has become too dominant in deep South America. The whole situation just sucks, and it’s hard to imagine that AA and LATAM are no longer partners at all, for if they still were, we wouldn’t have to see these bandaid moves from AA. It makes no sense for those premium AA and oneworld flyers to have to connect from a premium to an ULCC product.

But hey, I guess it’s fitting, given that AA has shown their commitment to being basically nothing more than a ULCC with full-service prices (particularly on domestic and short-haul), so it’s only fitting that they go ahead and partner with other ULCCs.

From JetSmart's side? yes, they're probably charging peanuts for that deal so it's surely a bargain, here in South America the economies and airlines are worse than you could imagine.

I just flew LATAM premium economy from SCL to MVD and it exceeded my expectations. Though they still use economy seats, the armrests have been moved apart to give an extra few inches of space, seat pitch and recline are generous, blocked middle seat covered with table that gives extra space for drinks, the food was decent, service good, and the cabin is truly separated from coach (with a dividing wall and (non-see-thru) curtain. Better than domestic first class flights of comparable length in the US. Losing LATAM was a big loss for AA.