United Airlines Pursuing Latin America Mega-Alliance?

United Airlines Pursuing Latin America Mega-Alliance?

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A couple of weeks ago it was announced that Delta is buying a 20% stake in LATAM, which also means that LATAM will be leaving oneworld, and will be breaking off their partnership with American. This came as a huge blow to American.

Well, it looks like we could now see a new partnership for United Airlines that would put them in a pretty strong position in Latin America.

United Airlines’ New Plan For Latin America

United Airlines is in the Star Alliance, as are Avianca and Copa. While the three airlines have long cooperated in some ways, in November 2018 it was announced that a new joint venture would be formed between the three airlines.

Unfortunately this has been delayed significantly, and as of now the airlines still haven’t filed for a joint venture. That’s primarily because of Avianca’s financial situation.

Well, it looks like we could see an even bigger partnership in the future. Brazil’s Azul Airlines has confirmed that they’re in talks to form a joint venture with Avianca, Copa, and United, for flights between the US and Latin America.

Interestingly United has an equity stake in Azul and a partnership with them, but that’s completely separate from United’s partnership with Star Alliance partners Avianca and Copa.

If approved, this would certainly be one way for United to try to compete with Delta’s new partnership.

While this is a smart competitive response on United’s part, I can’t help but feel like the whole partnership wouldn’t be terribly cohesive:

  • Copa is great if you’re traveling to Central America or Northern South America, but isn’t exactly ideal if traveling to Southern South America, given that they exclusively fly 737s
  • Avianca has a pretty good network, but again, connecting in Bogota isn’t always ideal if you’re headed to Southern South America; in many ways Avianca and Copa have similar models for connecting passengers
  • In that sense Azul would be cool, since they fly to Brazil, though they also aren’t perfect; their long haul flights from the US don’t go directly to Sao Paulo (rather they fly to Viracopos, among other airports), and with the exception of their A330s, all other planes are in a one cabin configuration

This Leaves American With Few Options

All of these developments are awful news for American Airlines. The airline has historically been dominant in Latin America, but by losing LATAM they’re left without any real partners. There are talks of American forming a partnership with Gol. That’s useful for regional connections, but is of limited value beyond that.

While American may continue to be the strongest US airline to Latin America, their lack of partnerships and joint venture prospects puts them in a tough situation in terms of overall connectivity.

Some people had suggested that maybe American should pursue a partnership with Azul, though that seemed highly unlikely, given United’s investment in them.

Bottom Line

It would make a lot of sense for United to try to get Avianca, Azul, and Copa, all under the same joint venture agreement. Assuming they could get approval, this would make them much stronger in Brazil, and also in Southern South America.

Ultimately it still wouldn’t exactly be the most well coordinated partnership (Azul is quirky and Copa and Avianca largely have similar models), but it is the best way to compete given the situation. Furthermore, we could see the airlines evolve with a joint venture like this.

What do you make of a proposed joint venture between United, Avianca, Azul, and Copa?

Conversations (28)
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  1. roger Guest

    As a Long Time AA Flyer, I hope AA resumes flying Their Own Metal on many of the routes dropped due to the LATAM Codeshares. LAN was decent but once they merged with TAM the New Airline really didn't have any appeal. GOL would definitely be a Step Up in the Brazilian Market and maybe Aerolinas Argentina would consider dropping out of ST and partnering with OW Airlines like AA and IBERIA.Losing LATAM may look...

    As a Long Time AA Flyer, I hope AA resumes flying Their Own Metal on many of the routes dropped due to the LATAM Codeshares. LAN was decent but once they merged with TAM the New Airline really didn't have any appeal. GOL would definitely be a Step Up in the Brazilian Market and maybe Aerolinas Argentina would consider dropping out of ST and partnering with OW Airlines like AA and IBERIA.Losing LATAM may look bad on paper but I for One will NOT Miss them.....mediocre at Best.And "If" United think a JV with Azul,Avianca and COPA would get approved....They are really delusional. JVs are not good for the Consumers

  2. Joyce Guest

    Great hopeful news! I fly to Montevideo frequently and take an extended layover from direct United to São Paulo to get Latam connection to Montevideo. Anything to avoid the air “bus” that Copa has. Always packed, no economy plus, old business seats and generally grouchy employees.

  3. Grey Guest

    I don't really understand the problem? If you fly with Copa or Avianca to a city that isn't a hub, you would need to change planes. This is the case with virtually every full service airline. I imagine the point is to serve the maximum number of destinations as efficiently as possible. Not to have the most non-stop options. Additionally, were a joint venture to happen, I would expect United would fly their own metal...

    I don't really understand the problem? If you fly with Copa or Avianca to a city that isn't a hub, you would need to change planes. This is the case with virtually every full service airline. I imagine the point is to serve the maximum number of destinations as efficiently as possible. Not to have the most non-stop options. Additionally, were a joint venture to happen, I would expect United would fly their own metal from most of their hubs to the largest Copa and Avianca and Azul hubs to maximise the 1 stop options, the way they have with their transatlantic joint venture partners.

  4. schar Guest

    Ben, Azul's hub is Viracopos in Campinas, not Viracopas.

    Also, it is just outside of Sao Paulo, and they offer free executive buses from the airport to the city, so it's not a huge problem.

    Cant wait to see you fly Azul to FLL after your next Africa trip! :)

  5. Chopsteeq Guest

    Viracopos, not Viracopas.

  6. Nick Guest

    There are lots of comments stating that Copa exclusiveley flying 737s is a problem... but looking at the South American market, it actually isn't.

    Copa's 737MAXs were the first narrowbody aircraft to have life-flat seats in the continent. I know those are grounded, but even though, COPA's 737's are way more comfrotable for the passenger than most (if not all) other short-haul aircraft in South America. Copa is also one of the three airlines (the...

    There are lots of comments stating that Copa exclusiveley flying 737s is a problem... but looking at the South American market, it actually isn't.

    Copa's 737MAXs were the first narrowbody aircraft to have life-flat seats in the continent. I know those are grounded, but even though, COPA's 737's are way more comfrotable for the passenger than most (if not all) other short-haul aircraft in South America. Copa is also one of the three airlines (the other beeing Azul and Avianca) to offer personal IFE across most (if not all) of the mainline fleet.

    Most important of all, COPA is usually a more convenient (and cheaper) option to those originating in secondary cities in South America and flying to the US. Let's remember that the South American public is extremely price senstive, and they wouldn't matter flying a 737 all the way to the US (especially given that those are more comfortable than the competitors, who don't even have a proper business class cabin) if the price is right, regardless of horrible departing and arriving times and layovers in PTY.

    Also, those coustumers flying from secondary cities would need to connect anyway, and sometimes it is more practical to connect in PTY than backtracking to another hub (specially in Northern, Central and Northeastern Brazil). Even some frequent flyers sometimes prefer COPA's 737 over having to go all the way to GRU,SCL or BOG to fly an widebody. Of course a lie-flat seat on a 777 is better than a recliner on a737, but some times the convenience and fares that COPA offers is more attractive.

    The same applies to Avianca, but they re not as foccused on North-South connections as Copa is.

  7. Paolo Guest

    It's an interesting perspective but I think Ben (the author) might not have traveled a lot with Avianca or Copa. Avianca has multiple hubs. Copa doesn't. Copa has very comfortable (for economy class) service in 737's from one single mega-hub to Buenos Aires and San Francisco etc. I would much prefer flying economy from San Francisco to Buenos Aires with COPA and the quick easy connection (great duty-free selections) than flying United non-stop (if it...

    It's an interesting perspective but I think Ben (the author) might not have traveled a lot with Avianca or Copa. Avianca has multiple hubs. Copa doesn't. Copa has very comfortable (for economy class) service in 737's from one single mega-hub to Buenos Aires and San Francisco etc. I would much prefer flying economy from San Francisco to Buenos Aires with COPA and the quick easy connection (great duty-free selections) than flying United non-stop (if it were an option).

  8. Kyall Guest

    Qantas got raped by Latam leaving oneworld

  9. Charlie Guest

    ChadMC is correct. In my opinion, the US airline that will win the Latin America market is the airline is that is willing to fly its own metal on long-haul flights. When American dominated in the 1990s and 2000s, they flew their own metal. As they started to rely increasingly on LATAM codeshares, their dominance began to fade (and as ChadMC points out, their service degraded). If losing LATAM means that American will have to...

    ChadMC is correct. In my opinion, the US airline that will win the Latin America market is the airline is that is willing to fly its own metal on long-haul flights. When American dominated in the 1990s and 2000s, they flew their own metal. As they started to rely increasingly on LATAM codeshares, their dominance began to fade (and as ChadMC points out, their service degraded). If losing LATAM means that American will have to increase its own flights, then they can recover their dominant position. We know Delta will not commit its own metal to Latin America because their cost-containment strategy is to outsource as many flights as possible (to the annoyance of the Delta pilots). United seems happy with its dominant position from the US to Europe and Asia, so I don't see them making more than a half-hearted commitment to Latin America.

  10. Stogieguy7 Diamond

    Regarding the post above ^ - Avianca flies the A320 series to most of those SA destinations and not the 737. On which I've flown. I don't know, I guess I had Copa on the mind.

  11. Stogieguy7 Diamond

    Copa has a very clever network that works quite well, though the farther you get from Panama, the uglier your departure and arrival times get (i.e. super late or super early) out of necessity. The problem is that everything runs via Panama City, which isn't that competitive for a partnership with United for flights farther into South America or northwestward into smaller Central American cities. Too many stops.

    Avianca (which became a player in...

    Copa has a very clever network that works quite well, though the farther you get from Panama, the uglier your departure and arrival times get (i.e. super late or super early) out of necessity. The problem is that everything runs via Panama City, which isn't that competitive for a partnership with United for flights farther into South America or northwestward into smaller Central American cities. Too many stops.

    Avianca (which became a player in Central America and Peru after acquiring TACA) has a great route network in Central and northern South America and Bogota is a little better of a connecting point for South America. They also have hubs in Lima and San Salvador so they're more spread out than Copa. That said, their flight schedules are less than ideal to connect into deeper South America. And, you're stuck on a 737 for a long day to places like SCL or EZE. Having flown them to deep South America from SJO, I can tell you that this is less than ideal.

    Lastly, Azul. Strong Brazilian network. However, the flaw here is that Azul only serves a couple of US airports (I think both are in FL, IIRC). And their hubs in Brazil tend to be secondary airports, like Campinas which are not feasible to connect through if you're flying in on UA.

    So, in many ways, this is a Frankenstein's monster that has a lot of coverage but it will take a lot of reconfiguration to make this network work cohesively and competitively. Delta/LATAM definitely have a big lead to start with.

  12. Ben Holz Gold

    Main issue with COPA is their J seats and their connections schedule when coming from Europe and presumably the US too.

    It's one thing connecting onto a short daytime flight for 2-3 hours in LATAM Y and another connecting onto a relatively long (5+ hours) on a COPA recliner seat on an overnight flight.

  13. Roman R Guest

    Aerolineas Argentinas is part of SkyTeam with Delta, could American offer it something more than what SkyTeam/Delta does now?

  14. Nick Guest

    Even with this alliance, i think Delta still has the advantage in South/Central America...

    Though Avianca gives United access to the important Colombian and Peruvian markets, and COPA flies to lots of places in the Americas, thier networks are highly overlapping, because of very similar business models.
    In Brazil, Azul is a HUGE player, they have over 100 domestic destinations, far more than any other airline, so this JV, could allow United's access to...

    Even with this alliance, i think Delta still has the advantage in South/Central America...

    Though Avianca gives United access to the important Colombian and Peruvian markets, and COPA flies to lots of places in the Americas, thier networks are highly overlapping, because of very similar business models.
    In Brazil, Azul is a HUGE player, they have over 100 domestic destinations, far more than any other airline, so this JV, could allow United's access to all of these markets. The main problem is that United doesn't fly (neither intends to) to any of Azul's hubs in Campinas, Belo Horizonte and Recife, serving only Rio and São Paulo/Guarulhos in Brazil. Azul is virtually absent in the former, but has a significant network from the latter, although to destinantions already served (and better covered) by LATAM.
    Most importantly, this JV wouldn't help United in other key markets in South America, like Argentina and Chile.

    Delta, on the other hand, will benefit from the fact that LATAM has a huge presence in the largest markets in Latin America: Brazil, Chile, Argentina, Peru and Colombia (although smaller than Avianca in these last two), and also in less significant markets like Ecuador and Paraguay. LATAM's network in all of Delta's destinations in South America is also extensive. In Central America, Delta can rely on Aeromexico.

    That leaves GOL and Aerolineas Argentinas as the only large un(US)alligned carriers in South/Central America... poor American.

  15. Ferdinand Magellan Guest

    Allow me to play devil's advocate. None of this matters. North American-Latin American airline partnerships are virtually meaningless. The only thing that they're good for is suppressing competition, and they don't even do that very well.

  16. Phil Guest

    American should try and pursue a partnership with Aerolineas Argentinas too to perhaps convince them to leave Skyteam for oneworld.

  17. ChadMC Guest

    AA has been consistently downgrading service to Latin America. I have personally seen this. They used to fly 767s and 757s to many destinations to be downgraded to now only 319s. Tons of routes in the caribbean have also been downgraded. Some Brazilian routes are being downgraded from 757s to MAX planes as well (presumably once they start flying again) (I believe I read that here on this site). BOG was served by a 767...

    AA has been consistently downgrading service to Latin America. I have personally seen this. They used to fly 767s and 757s to many destinations to be downgraded to now only 319s. Tons of routes in the caribbean have also been downgraded. Some Brazilian routes are being downgraded from 757s to MAX planes as well (presumably once they start flying again) (I believe I read that here on this site). BOG was served by a 767 with a full hot meal in coach even. Today it's served by a 319 with a wrap for 'dinner' at best. Why? Their relationship with LATAM which also flies that route. Maybe they will return to a better plan with their pricing-partner now gone from them.

  18. Adrián C Guest

    AA with Latam Airlines was well served, since together with the subsidiaries, they reached the internal destinations of each South American country, in addition the Central American and South American market is the strongest that American Airlines have, in addition to Mexico

  19. Frank Member

    Hi Lucky - I think you are seeing this too much as a US flyer to Southern South America main city. Obviously, if you fly from US to Santiago, Lima, Rio, Sao Paulo and Buenos Aires you can get direct flights from anywhere in the US.
    However, what happens if you want to fly to Medellin? Cuzco? Iguazu? Cordova? You need Copa, Avianca or LATAM to get there, and that is were the mess...

    Hi Lucky - I think you are seeing this too much as a US flyer to Southern South America main city. Obviously, if you fly from US to Santiago, Lima, Rio, Sao Paulo and Buenos Aires you can get direct flights from anywhere in the US.
    However, what happens if you want to fly to Medellin? Cuzco? Iguazu? Cordova? You need Copa, Avianca or LATAM to get there, and that is were the mess starts. You think AA connecting to LATAM would be good but its a disaster, even in pre-Delta stake purchase.

  20. Adrián C Guest

    Copa and Avianca, are located one in Central America, and the second in northern South America, what I think is that American and United are looking for important connections in the South of South America, it would be Argentina, Bolivia, South of Brazil, Chile, Paraguay and Uruguay .

  21. Ben Guest

    I don't have a problem with Copa B737s as long as they convert all of them to flatbed J. OK, I'd settle for all the airframes they use on flights over 2 hours. ;)

  22. Justin Guest

    I've flown Avianca business class twice to Northern South America via Bogota. They've had super cheap paid business class fares from NY (around $1,200) but the quality of service is very meh. You either get a domestic First style seat on their narrowbodies or angled flat-ish seat on their A330. Food is not good, service is bare bones and their lounges are mediocre. Bogota at least has a new terminal though and the security lines have never been long for us.

  23. Robert Diamond

    AA's board must be seething! To go from dominance in a region to an also-ran in a matter of weeks. AA's leadership is asleep at the wheel with no strategy. Wow, what a mess! And it's not just AA's C-suite that needs cleaning, I'd say the entire board needs a rethink.

  24. Chico Luz New Member

    copa's strongest point is that they fly everywhere – and that is because they only use 737s. it's not a problem, really, specially considering that they have proper business class.

    and also: excluding some rogue flights, all airlines in brazil (and i believe it's the same throughout south america) only operate with economy cabins. be it gol, latam, azul or avianca, we don't have biz seats on domestic flights on narrowbody aircraft. it's been stated...

    copa's strongest point is that they fly everywhere – and that is because they only use 737s. it's not a problem, really, specially considering that they have proper business class.

    and also: excluding some rogue flights, all airlines in brazil (and i believe it's the same throughout south america) only operate with economy cabins. be it gol, latam, azul or avianca, we don't have biz seats on domestic flights on narrowbody aircraft. it's been stated before, but for some reason a lot of readers still insist on gol or azul being a 'problem' comparing to latam, and it doesn't make any sense

  25. Steven New Member

    Just got an American credit card and have been stacking AAdvantage miles for the past few years specifically to take advantage of American's great partner redemptions in LatAm. Imagine always being guaranteed a 20K mile ceiling for an LA to Cusco, or Seattle to Bogota flight? Their loss, I guess, as whoever partners with LATAM is gonna get my loyalty. I can't imagine I'm the only one.

  26. Greg Guest

    I have flown on Copa between Buenos Aires EZE and Panama City nonstop on a brand new plane (not sure the type) back in 2013. Today, they have three flights a day between these two cities operated by a 737-800. I don't see the problem Lucky identified in his article.

  27. Alvin Guest

    What happens to Aerolineas Argentinas??
    ow shift a la China Southern?

  28. Ryan Member

    American may need to compensate with more flights using their own metal. Doesn't do much for intra-Latin America connections, but it would negate much of the sting from losing LATAM.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

roger Guest

As a Long Time AA Flyer, I hope AA resumes flying Their Own Metal on many of the routes dropped due to the LATAM Codeshares. LAN was decent but once they merged with TAM the New Airline really didn't have any appeal. GOL would definitely be a Step Up in the Brazilian Market and maybe Aerolinas Argentina would consider dropping out of ST and partnering with OW Airlines like AA and IBERIA.Losing LATAM may look bad on paper but I for One will NOT Miss them.....mediocre at Best.And "If" United think a JV with Azul,Avianca and COPA would get approved....They are really delusional. JVs are not good for the Consumers

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Joyce Guest

Great hopeful news! I fly to Montevideo frequently and take an extended layover from direct United to São Paulo to get Latam connection to Montevideo. Anything to avoid the air “bus” that Copa has. Always packed, no economy plus, old business seats and generally grouchy employees.

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Grey Guest

I don't really understand the problem? If you fly with Copa or Avianca to a city that isn't a hub, you would need to change planes. This is the case with virtually every full service airline. I imagine the point is to serve the maximum number of destinations as efficiently as possible. Not to have the most non-stop options. Additionally, were a joint venture to happen, I would expect United would fly their own metal from most of their hubs to the largest Copa and Avianca and Azul hubs to maximise the 1 stop options, the way they have with their transatlantic joint venture partners.

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