LAN takeover of TAM
 

It looks like regulatory approval of LAN's proposed takeover of TAM will be coming very soon. Any thoughts on how this will impact us? What can we expect in terms of integration of TAM into Oneworld? That offers a great route system in Brazil and other parts of South America, plus TAM has nice routes to Europe.

I've heard LATAM will be Star Alliance. What makes you think they'll be in Oneworld?

I had heared that both CEO state that the decision of alliance would not be made until a much later date after the approval...

Thus I will not be surprised to see three possibilities:
1>, both in Star
2>, both in oneworld
3>, Keep the situation now until 'later'*
* (later means when there is demand that they have to make a full commitment, or when corruption occurs)

... and, of course, if it is OW,
will we be able to use BA miles on TAM routes...?

I guess no one even knows if the BA options
to South America will be changed with "Aviros".

I could be mistaken, but it seems to me that if LAN is in Oneworld, and it is the acquiring company, then the combined airline would be in Oneworld. What have you heard differently?

LAN may move to the Star Alliance at some point after the deal is closed.

There are no guarantees LAN will stay with Oneworld. I guess you've missed the proposal Star made last December and the ongoing discussions since then. Where LAN ends up is very much up in the air.
http://www.flyertalk.com/forum/onewo...hlight=lan+tam
http://www.latamairlines.com/downloa...omer%20FAQ.pdf

Truth is no-one knows for sure......although the word from inside the airline industry is that they'll be in Star. Which probably means they'll be in Oneworld. :D

Wow, OneWorld reckons to have the best South American network with LAN, if LAN went to Star that'd be LAN, TAM, Avianca and TACA in Star, Save for a bit of Paraguay and the odd AA and Quantas flight coming to South America, Star would have everything south of Mexico

I think that a lot of people here are making a lot of assumptions.

I expect that the LAN takeover of JJ will go ahead, but that in itself is no guarantee that JJ will end up in OW.

I would think that the Brazilian authorities would look long and hard at whether the combo of AA/ LATAM/ IAG is something they would be happy with.

It is entirely possible that they will say "yes" to the takeover, and "no" to a JJ move to OW due to the concentration of market share they may be forced to stay in two separate alliances post merger if they cannot get regulatory approval for JJ to move to OW (All it would take is for the Brazilian authorities to say that they would not approve JJ resuming a frequent flyer earning and redemption agreement with AA - since ff reciprocity is a pre-requisite of membership - and that would mean that JJ could not move) The US-Brazil market has changed considerably since the last time that AA and JJ had a frequent flyer agreement - RG has disappeared and JJ flies a much more substantial USA schedule, so it is by no means a foregone conclusion that authorities would permit a tie-up between JJ and AA to be resumed.

same reasoning can be applied to an eventual LH-TAP-TACA-Avianca-LATAM combo. The latter two would scoop entirely the SA market, leaving no space either for other alliances. If happening would replace a perceived OW "dominance" with an undesirable * monopoly, especially on EU-SA routes.

I'm not saying that LATAM would end up in *A either, I agree that would be unhealthy too. I am saying that LATAM may, whether they like it or not, have to stay split over two alliances. I just don't think that people should assume that JJ in OW is an automatic follow on from the LAN takeover of TAM. It aint over until the regulators sing.

Who's making assumptions now? :D

Here's another one....LATAM will be in Star. IAG buy TAP so they'll leave Star. GOL will join Oneworld and the equilibrium of the alliances in S America will be restored.

But then why can't it be the other way round. LATAM will be in OW. LH will buy TAP and GOL will go to ST.

IAG said that they would try to buy TAP, but the Portuguese PM urges Lufthansa to consider TAP.

At the end we will just have to wait till LATAM announces the news, it could go in any direction for any airline.


Links:http://www.breakingtravelnews.com/ne...-consider-tap/
and http://www.centreforaviation.com/ana...eighs-in-58245

LH are welcome to buy TAP. I don't see the IAG interest in them being a serious one despite my earlier tongue in cheek comment.
All they can offer IAG is lot of routes to Brazil mainly used by the leisure market and nowt much else.

That TAP is being offered to LH is quite understandable, since Portugal is one of the PIGS (financially speaking) and the company is one of the its few valuable assets that may be of some interest to the almighty german government. Another story is the willingness of the gangsters in Cologne to swallow it without provoking some afterthoughts in a usually tame EU antitrust (while if IAG is involved they would immediately start howling).
What exactly LH can offer more than IAG to TAP? I'd say not much more unless they wanna make Lisbon their exclusive hub for SA...

for a self-described *A fan as you are should be difficult to admit that for once LH is in a disadvantaged position. I'd say that this merger will be approved unconditionally and being JJ the takeover target we can expect they will indeed join OW. Not for nothing LH/* has not wasted any time to enroll the next best option, TACA/AVIANCA.

I quite readily admit that things are not looking good for *A with regard to JJ , and I have never said that JJ won't/can't leave *A.

What I have said is that regulatory approval for LAN's takeover of TAM does not automatically equal regulatory approval for TAM to join LAN in OW.

It may happen, it may not, but one does not automatically follow from the other.

LAN and TAM joining forces actually produces fairly limited concerns from a consumer/competition perspective, there is very little overlap ( for obvious reasons I don't like the deal, but in and of itself, I don't believe the takeover is anti-competitive.)

TAM joining OW and ending up allied with AA as well could be viewed very differently from a consumer/competition perspective. When IB is added to the mix as well the combination could certainly be argued to be detrimental to competition and to the consumer and, in my opinion ( yes, I admit that it is opinion) I would expect that any relevant authorities would scrutinise such a move very carefully prior to approving it.

If it is your opinion that after the takeover a subsequent move by JJ to OW will be rubberstamped by any and all relevant authorities without any investigation at all regarding the concentration of market share and the impact on consumers/competition, well that's fine, you are also entitled to your opinion.

I fully expect the LAN takeover of TAM to proceed ( I don't deny that I would prefer it not to, furthermore, I think it was extremely unethical for TAM to have actually gone through with their accession to *A and only 3 months later announce their intention to be taken over by a member of a rival alliance - the deal had clearly been in the making for quite some time and I do not believe that JJ acted in good faith when they joined *A)

I am also not sure what you mean by 'for once' LH ( I assume you actually meant *A) is in a difficult position. *A has been in a difficult position in Latin America for a long time , and I freely admit that too.

Nice language.

I think LH has reached its management capacity in terms of integrating more troubled airlines. LH would be attractive as the bigger, financially more stable company with a proven model and experience in integration airlines while leaving their local infrastructures in place. IAG would of course also be a good partner with a bit less financial stability and experience. If I were LH I would try to bid for TAP and make it as expensive as possible for IAG to then finally get the airline.

I think the Potuguese government believe that more TP jobs will be protected by a LH takeover rather than a IAG one. Their fears (possibly justifiably) will be that IB will wish to route passengers to marginal destinations through their MAD hub and will cut back TP service. TP and IB share a focus on Latin America, and joining LH may be seen as a better way to protect TP's network and jobs.

BA would have to write in some concessions and binding stipulations to convince the Portuguese govt that TP won't be rolled into IB and MAD.

certainly they know that there are much more possibilities that LH will be allowed to gobble another airline without anyone in EU raising objections, contrary to what will happen should IAG be involved. However it remains to be demonstrated how TAP will be integrated into a monolithic monopoly, and what will be the costs involved on that.

IAG should do exactly the same, and instead concentrate on the biggest prize on the continent, LATAM.

Does LH not also have a Latin America focus, doubling up with TP on routes to GIG, GRU, CCS and EZE?

IB is stopping its services to Fortaleza and Recife so the destinations that IB and TP covers become the same as the destinations that LH and TP covers

Lan’s Purchase of Tam Cleared in Chile Court With Conditions; Tam Advances
 

http://www.bloomberg.com/news/2011-0...onditions.html

Lan Airlines SA (LAN)’s planned purchase of Brazil’s Tam SA (TAMM4) to form the world’s second-biggest carrier by market value was approved by Chile’s antitrust tribunal with several conditions.
Tribunal de Defensa de la Libre Competencia, or TDLC as the court is known, gave final Chilean clearance for the transaction in a split vote, according to a statement sent by e-mail today. Conditions include Lan and Tam opening up their frequent flyer program to other airlines, exiting one of their global alliances and capping Santiago-Sao Paulo fares until they exchange four daily slots in Sao Paulo’s Guarulhos airport with other carriers. The tie-up still requires Brazilian approval.

Looks like LATAM is gonna join OW
 

This link is in spanish:
http://www.estrategia.cl/detalle_noticia.php?cod=44972

When I translated it to English, there was a very important part to the conditions that LATAM has to agree on an here it is:

Rule number 6: Latam must resign within a period not exceeding 24 months from the date you accessed Operation materialize, at least one of the two global alliances, at that time involved parts, LAN and TAM. In no case may belong to one in which the group also Avianca / Taca is a member or associate, or is in the process of entering.

Rule number 7: For Avianca / Gol Taca or may not hold or maintain code-share arrangements in the other international routes within South America where superpogan air transport services with those of Latam.

Looks like it's bye bye to Star.

Indeed. Condition #6 for the approval of the merger is quite clear. LATAM has to be in one alliance only and cannot be in the same alliance AV/TA are members of or are in the process of joining.

Furthermore, no codeshares on flights to/from Chile (including connecting flights via South American gateways to Europe/North America) with airlines not members of the same alliance LATAM is in without the consent of the TDLC. No codeshares with AV/TA or G3 for South American flights on routes where both LATAM and AV/TA and/or G3 operate services.

At this point LATAM can either
1) bring JJ into oneworld
2) give up the merger
3) join Skyteam (both LA & JJ)

3) is most possibly a no go.

Quite interested in reading the feedback of the Brazilian antitrust authority. Anyhow good news for OW IMO. ^

You've made my day - its party time! I've always said that Government Regulators are very intelligent people -well except the ones that regulate financial markets........and banks........ and Airport charges in Australia..........and........but ones regulating dragging TAM out of Star - very intelligent people.

indeed that particular rule appears to specifically bar any * involvement in LAN. Also the clear notion about the "two" alliances involved in both parties rules out ST. So it will be OW definitely and that is a very good news. However i concur on what Kiwiandrew once said about TAM joining * just before finalizing talks with LAN, timing quite suspicious and overall a very poor behavior, unless they did this to purposely entice LAN.
Alliance wise now, Latin America should become like this:

OW: LAN, TAM and a good command of EU and US routes to the region;
*: Avianca, Taca + possibly Gol: this would help to get back the remains of Varig again in the alliance;
ST: Aeromexico + Aerolinas Argentinas: so far the losers in the region

+ Copa

So far as anything practical is concerned, the principal legacy of RG is the Smiles frequent flyer program. There are also a few lounges that Gol really has very little use for, such as the one in T2 of Galeão. It gets very little use, as Gol flies from T1. Is there anything else left?

If LATAM definitely stays in OW, I just don't see how the EU will approve of IAG buying TP. It will give OW and insane amount of pricing power from the Iberian peninsula to S America. Combining AA, LATAM, IB and TP would be nearly monopolistic.

but if they are bought by LH this would increase their already unhealthy stranglehold they have in CE market, although I doubt the clowns running EU antitrust would give more than a cursory glance.

Slightly adjusting the topic:

What does the provision of the Chilean government's approval that requires LAN and TAM to open their FF programs to other airlines mean for oneworld?

If smaller rivals participate in the program, would they be treated as oneworld affiliates?

Is this provision meaningful or can LATAM make up whatever participation requirements and conditions they want, effectively closing the program to outside airlines?

Sorry, I haven't seen a good explanation of the provision, since my Spanish is quite poor and my vague notion of what something says in Portuguese is based on its similarity to Spanish.

Personally, would rather have IAG focus on the Italian market and make a bid for IG. Other than IB, OW is rather weak in the Mediterranean area. Also, I'm wondering if IAG can capture some LIS-Brazil O&D for less money than buying TP itself. Although, I do like the idea of OW stealing another member from Star.

It really doesn't mean that much, as there is little if any competition on the routes mentioned by the provision.

In theory, G3 could take advantage of it, but I suspect the Brazilian govt would have something to say about that. Based on stated routes like MVD-SCL, Pluna (PU) could make such a request.

It would probably be in LA's interest to make them affiliates as they could provide feed to LANTAM/OW and vice-versa. However, I see nothing in the provision that says LA is under obligation to do so.

Participating in LANPass and being an affiliate are two different things. For instance, OpenSkies(EC) participates in BAEC, but is not a OW affiliate member.

The provision does state that..

If ... an airline ... ask to participate in the Frequent Flyer Program of Latam, the latter shall extend for five years all those benefits. "

Based on that, I would imagine that LA has little ability to restrict participation of any airline that qualifies under the stated provision.

Now approved by Brazil
 

This should be interesting...

Especially this bit:

Expect some heavy lobbying from Oneworld and Star. Hopefully the fact that LAN has been part of Oneworld much longer than TAM has been part of Star, will swing them our way.

Happy Travels.

It also stated that it has to be a different Alliance from Taca/Avianca (currently in *A). I can't see *A kicking out Taca in hopes of getting LATAM.
Odds are very much in favor of LATAM going to OW, IMO. ^

I could, *IF* those hopes are not just hopes, but very meaningful possibility.

LATAM would be more valuable than Taca/Avianca for either alliance.

I hope OW is able to get/keep them, it would be a HUGE blow to OW if LATAM left.