SAO PAULO: A surprise US$1.9 billion investment by Delta Air Lines in LATAM Airlines Group is likely to fire up competition in South America as the weakest U.S. carrier in the region joins up with the strongest homegrown player.
"This shows you that the 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.
"American and LATAM had a number of overlaps that created issues," Delta Chief Legal Officer Peter Carter told investors last month."And we just don't have that here."American said in a statement it"remains the largest U.S. carrier to both Latin and South America and we look forward to competing and growing in this region of the world."
In recent years, Delta has grown frustrated with the Gol partnership, which did little for its South American push beyond Brazil. LATAM and Avianca have broader regional ambitions, investing in domestic airlines outside their home markets.
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