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Despite Challenges, LATAM Airlines Group Forges a Positive Future.

by Erich Martin

Sep 10, 2020

PHOTO: © LATAM

September 2020

Last year, LATAM shocked the airline and travel industries when it announced its plans to withdraw from oneworld airlines alliance. As of May 1, LATAM Airlines Group officially left the alliance while keeping an eye on the future.

LATAM notified alliance leadership of its plans last September and immediately announced the foundations of a strategic partnership with Delta Air Lines. The partnership includes a fair amount of monetary investment from Delta’s side and threatens to create a massive alliance aligning two of the strongest airlines in the Americas.

The partnership includes a $1.9 billion investment from Delta, representing a 20 percent stake in LATAM. Other investments in the airline from Delta include $350 million for the establishment of the partnership and the purchase of some of LATAM’s Airbus A350 aircraft. Delta is also represented on the LATAM board of directors.

Despite its departure from oneworld, LATAM maintains its strong relation- ships with many of the participating airlines. Bilateral agreements with British Airways, Finnair, Japan Airlines, Qatar Airways and others remain in place. Passengers can still book flights for these partners on LATAM’s website, earn and redeem frequent-flyer miles across carriers, have reciprocal lounge access and more. The airline is terminating its partnership agreement with American Airlines.

“Our priority has been to provide a seamless transition for customers as we work toward offering the leading connectivity in the Americas,” a LATAM spokesperson said in a statement. As it leaves oneworld, LATAM affirms it has no current plans to join any other alliance. “LATAM is committed to offering leading connectivity between Latin America and the world as well as provide the best travel experience to continue being the first choice for customers traveling to, from and within the region.”

To complicate matters, however, in May the COVID-19 pandemic forced LATAM to file Chapter 11 bankruptcy, causing some speculation as to Delta’s stake in the airline group. For its part, Delta expressed no regret about the deal.

“We remain firmly committed to our partnership with LATAM and believe that it will successfully emerge a stronger airline and Delta partner for the long term,” said Ed Bastian, CEO, Delta Air Lines.

In July the U.S. Department of Transportation approved plans by Delta and LATAM to codeshare on U.S.–Chile routes while the two carriers formally requested antitrust immunity for their long-awaited joint venture. According to the two carriers, when demand conditions return to pre-pandemic levels, the incentives of the joint venture would enable them to offer “seamless metal- neutral service in over 7,000 city-pairs, including new or expanded service on at least 18 nonstop routes.”

Leading up to its departure from oneworld, LATAM made changes and adjustments for the future. In New York City’s John F. Kennedy International Airport, LATAM transferred operations from Terminal 8 to Terminal 4. As Delta serves more than 90 destinations from Terminal 4, the move facilitates more seamless service for passengers catching a Delta connection off a LATAM flight. The move went into effect Feb. 1 and coincides with the two airlines’ continued efforts to implement additional bilateral lounge access and mutual frequent-flyer benefits.

PHOTO: © LATAM

While planning for continued service post-alliance withdrawal, LATAM continued to improve its in-air product. In January it announced a new premium- economy cabin for international flights and flights in Latin America on its Airbus A320 family fleet. Premium economy is available on short- and mid-haul flights, while the airline’s Premium Business Class remains available on long-haul flights. Upon implementation, LATAM will be the only airline to offer premium-economy service across its entire portfolio of destinations.

On short flights, LATAM passengers can purchase standard economy or premium economy. In addition to distinct cabin options, economy customers can also choose certain LATAM+ seats. Lacking the amenities of premium economy, these options offer more space and reserved overhead bins.

At the airport, premium-economy passengers enjoy priority check-in, increased baggage allowances, priority boarding, priority baggage claim and VIP lounge access in airports where it is offered and on certain international flights. In-flight amenities are even better and include a guaranteed seat in the first three rows of the aircraft, a blocked middle seat for increased privacy, an exclusive overhead bin for luggage and differentiated onboard service including complimentary snacks and drinks.

While the premium-economy product became available on all flights in March, last year LATAM rolled out an updated and improved Premium Business Class across its fleet. Passengers enjoy direct aisle access, 180-degree reclining seats, ample storage space and more. The rollout preceded a new wellness-inspired experience. The cabins include mindful dining concepts to promote rest including lighter dinners and fuller, more nutritious breakfasts on overnight flights. New service protocols ensure fewer interruptions, while premium bedclothes and mattresses ensure a comfortable flight.

According to LATAM officials, the Premium Business Class has been well-received by customers as it rolled out across the entire network. As LATAM works to better its in-flight product, it also works to expand its network to provide customers with an ever-expanding portfolio of potential destinations.

LATAM launched 27 new routes in 2019 and this year announced a new non-stop service between Santiago (SCL) and Frankfurt (FRA), scheduled to start June 30. Due to the pandemic, the carrier delayed the launch of that flight to the first quarter of 2021. The service will strengthen the relationship of the two countries while significantly reducing the time it takes to travel between them. The planned itinerary will offer 10 weekly flights.

LATAM’s efforts to expand its network and give passengers more options have not gone unnoticed, for the second year earning the airline “Best Cabin Service” and “Best Flight Entertainment Service” in Latin America in the Airline Passenger Experience Association’s 2020 Regional Passenger Choice Awards.

“These awards are a direct acknowledgement of the passengers to the crews that serve the millions of passengers a year. … And they confirm that we are well-focused on improving the experience of our passengers,” said Juan Ordoñez, vice president, On Board Service, LATAM Airlines Group.“Today we can say that there is no other airline in the region that offers as many cabin options as LATAM.”

Last year the group was also recognized as the most punctual global airline according to the annual “On-Time Performance Review” from Cirium, the expert consultancy firm that analyzes travel data. The report uses information from more than 100,000 daily flights, airports and airlines. In 2019 LATAM was on time or ahead of schedule 86.7 percent of the time.

“This achievement is the result of systematic work to consistently better our processes and ensure that punctuality is a top priority across the entire company,” said Hernán Pasman, chief operating officer, LATAM Airlines Group.

LATAM pushes the envelope for passengers, but the effort to serve a wider audience doesn’t end there. In February LATAM announced the introduction of two new cargo routes for goods originating in the United States and destined for Latin America.

The new routes — Miami (MIA)Panama (PTY)Bogotá (BOG) and Miami–Cali (CLO) — increase cargo capacity for general cargo, electronics, pharmaceuticals and dangerous goods. The introduction of the routes further solidifies Panama and Colombia as importing countries. As a cargo leader in Latin America, LATAM operates one of the biggest and most modern warehouse facilities at the Miami airport. Throughout 2019 the airline transported 903,000 tons.

Latin America’s most robust airline may have left its alliance, but it did so with the support of Delta Air Lines and other major carriers. It is far from isolated as it faces a new future.

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