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Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:03 am

It's certainly not news that both alliances have a lot at stake with the proposed merger of LAN and TAM. From the headlines, it looks as if the combined entity will be forced to choose one alliance for both carriers.

So the question becomes, what sweeteners will the alliances put in to close the deal? The loss would be pretty large for either alliance. We should know the outcome shortly.

http://blogs.ft.com/beyond-brics/201...flyer-points-tussle/#axzz1dfi8PSgi

http://www.economist.com/node/21538152
If it doesn't make sense, it's because it's not true.
 
lhr380
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:12 am

From everything I have read, the new company would be very stupid not to pick Oneworld.

Tam/Lan fly to the major Onewolrd hubs, with great connectivity to the rest of the Alliance.
(The views on this site are my own and no one elses)
 
MAH4546
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:17 am

Chilean approval actually mandates OneWorld, since Avianca/TACA are Star elect and can't be in the same alliance as LATAM.

Regardless, it's not much of a contest - to oneWorld TAM will go.
a.
 
SCL767
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:39 am

LAN Airlines S.A. and its affiliates continue to strengthen its ties with other oneworld alliance carriers. Last month, LAN Airlines S.A. entered into a bilateral code-share agreement with JAL. LAN Perú S.A. just renewed its code-share agreement with American Airlines. LAN Airlines S.A. was recently approved to code-share with Qantas Airways on QF's new SYD-SCL service, which launches next March. Interesting to note that LAN's CEO recently stated that the company values oneworld hubs at MAD, MIA and SYD. LAN's CEO has long been an advocate for the oneworld alliance and LAN has been a member of the oneworld alliance for over 11 years.
 
SA7700
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:58 am

Quoting MAH4546 (Reply 2):
Chilean approval actually mandates OneWorld, since Avianca/TACA are Star elect and can't be in the same alliance as LATAM.

With regards to market share, how do TACA and Avianca stack up to TAM and LAN in South America? Is it a "fair fight?"


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robffm2
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 11:04 am

While I agree many indicators point into the direction of oneworld, I don't think that *A has already lost the race.
There were good arguments for TAM to join Star, they remain valid also after the merger

Quoting lhr380 (Reply 1):
Tam/Lan fly to the major Onewolrd hubs, with great connectivity to the rest of the Alliance.

In Europe TAM was very strong in Paris, but that changed in favour of Frankfurt and to a lesser extend also of London.

Quoting MAH4546 (Reply 2):
Chilean approval actually mandates OneWorld, since Avianca/TACA are Star elect and can't be in the same alliance as LATAM.

Is it really unthinkable that Star will stop the process with Avianca/TACA? Star needs to generate the biggest benefit for it members, if a decision must be made between Avianca/TACA and LATAM STAR must base it on these benefits (and of course what legal requirements are existing). But AI has shown that there is no guarantee to join an alliance.

So, let me ask again: What can an alliance offer an airline and in this specific case, what incentives are there to join either? Is it
  • network
  • cross equity holding
  • joint purchases
  • marketing incentives
  • others
 
jfk777
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 12:17 pm

Quoting SCL767 (Reply 3):
LAN Airlines S.A. and its affiliates continue to strengthen its ties with other oneworld alliance carriers. Last month, LAN Airlines S.A. entered into a bilateral code-share agreement with JAL. LAN Perú S.A. just renewed its code-share agreement with American Airlines. LAN Airlines S.A. was recently approved to code-share with Qantas Airways on QF's new SYD-SCL service, which launches next March. Interesting to note that LAN's CEO recently stated that the company values oneworld hubs at MAD, MIA and SYD. LAN's CEO has long been an advocate for the oneworld alliance and LAN has been a member of the oneworld alliance for over 11 years.

LAN is the driver of the LATAM deal, with OneWorld it gets huge hub airlines in Madrid and Miami. IT also gets as a bonus in Qantas in Sydney which helps Asian traffic. When the 787 arrives its expected LAN will fly to LHR which will connect LAN to BA's network, who knows maybe even BA could fly to Lima. LAN is too connected to OW, support in MIA & MAD are ard to replace.
 
UAL777UK
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 12:45 pm

Unless the deal falls through which seems unlikely it does appear to me that the Flying Red Carpets days in Star are numbered which is a real shame from a Star pioint of view and also from my own personal point of view. I flew them from LHR to GIG and back on February and really enjoyed the flights.
 
mozart
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 2:26 pm

And if I understand correctly Avianca Brazil is a very very tiny activity compared to TAM in Brazil. No international flights, small presence on the Rio-SP corridor, small presence on other domestic routes.

What are Avianca's plans for growth of its Brazilian business?
 
C010T3
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 2:43 pm

Quoting mozart (Reply 8):
And if I understand correctly Avianca Brazil is a very very tiny activity compared to TAM in Brazil. No international flights, small presence on the Rio-SP corridor, small presence on other domestic routes.

What are Avianca's plans for growth of its Brazilian business?

Yes, they are very small, offering 130 daily flights to 24 destination. They do fly GRU-BOG though, but it is marketed by AV.
If you would like to compare, TAM offers the same number of flights and destinations at GIG alone.
 
LH506
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 2:58 pm

I agree that LATAM will go to 1W.

I guess the question is, how smooth will the transition JJ *A to 1W be? For how long will they accept miles/interline etc.?

On the other hand will UA/LH help AV-TA to boost AV-Brazil via management expertise, airplanes, capital...??
Or will they start fighting for GOL and convince them that joining Star instead of ST is in their best interest like they did with JJ (they had links with AF before they joined *A)??
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robffm2
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 3:38 pm

What is *A actively doing to get LATAM into their alliance?
There must be more than just a few phone calls and sending Christmas cards...
 
C010T3
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 3:40 pm

Quoting LH506 (Reply 10):
On the other hand will UA/LH help AV-TA to boost AV-Brazil via management expertise, airplanes, capital...??
AV-TA does not need help in that. They are already investing a lot in O6, but I think they are still waiting to see what the Brazilian antitrust counsel (CADE) decides about the TAM-LAN meger, since it will have repercussions on how they will incorporate O6 into AV-TA. O6 also urgently needs to adopt LifeMiles.
Another problem that Avianca Brasil faces is the lack of slots at GRU. They have been growing everywhere. That's why they have so many destinations, but so few flights. All Brazilian airports are saturated except for GIG. The earlier they realize that they must hub somewhere in order to be attractive to potential alliance partners, the better, but the stubbornness in insisting in GRU remains.

Quoting robffm2 (Reply 11):
What is *A actively doing to get LATAM into their alliance?
There must be more than just a few phone calls and sending Christmas cards...

There were some comments about it on Aviation Week:

http://www.aviationweek.com/aw/jsp_i...storyID=news/avd/2011/10/28/05.xml

[Edited 2011-11-14 08:01:36]
 
RCS763AV
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 4:20 pm

Quoting mozart (Reply 8):
What are Avianca's plans for growth of its Brazilian business?

O6 will be getting 5 A318s form LAN in 2012 and another 5 in 2013. 4 A320s from the current AV-TA order are being incorporated to the fleet in the following months (the 1st is already doing test flights in TLS) and more A319s and A320s are also planned for the coming years to expand and replace the F100s. A new order is also in the books for O6. The ultimate goal is to also have widebodies flying for AV Brasil.

Quoting mozart (Reply 8):
And if I understand correctly Avianca Brazil is a very very tiny activity compared to TAM in Brazil. No international flights, small presence on the Rio-SP corridor, small presence on other domestic routes.

They fly to BOG and they have already stated that they plan an launching two new intl destinations next year. But indeed, their domestic market share is very small at 3,5%.

Quoting SA7700 (Reply 4):
With regards to market share, how do TACA and Avianca stack up to TAM and LAN in South America? Is it a "fair fight?"

AVTA would be roughly 40% the size of the combined LAN-TAM, not counting AV Brazil. They have been growing 20% a year since the merger in 2009. Avianca controls the second largest market in the region which is Colombia, TACA controls Central America. LAN control Chile and Peru, while TAM are number one in Brazil, the largest. LAN has an important position but doesn't control Ecuador, Colombia and Argentina, and TACA does so in Peru, while AeroGal (fully integrated subsidiary of AviancaTaca) is in the same position in Ecuador.

Quoting robffm2 (Reply 5):
Is it really unthinkable that Star will stop the process with Avianca/TACA? Star needs to generate the biggest benefit for it members, if a decision must be made between Avianca/TACA and LATAM STAR must base it on these benefits

Well it's not unthinkable, but it would show a big lack of compromise from Star and it could be very counterproductive. I'm sure that not only would they have to pay a very hefty sum to AviancaTaca but that it would scare many other airlines from starting a process with them as there would be no guarantee of actually becoming members and getting their investment back.

Quoting LH506 (Reply 10):
On the other hand will UA/LH help AV-TA to boost AV-Brazil via management expertise, airplanes, capital...??

AV-TA don't need management expertise or money, they have both. In fact, when Oceanair was being terribly managed by brazilians, headquarters in BOG took over management for some time and made an actual business plan for the airline. The big issue with O6 is the lack of slots at GRU which is impeding growth, and the fact that the brazilian congress is taking light years to approve the new ownership legislation, a process that's already getting ridiculous. That has put a hamper on capital expenditures as O6 isn't receiving any of the benefits from the holding.

Quoting C010T3 (Reply 12):
O6 also urgently needs to adopt LifeMiles.

Indeed.

Quoting C010T3 (Reply 12):
Another problem that Avianca Brasil faces is the lack of slots at GRU.

Yes.

Quoting C010T3 (Reply 12):
The earlier they realize that they must hub somewhere in order to be attractive to potential alliance partners, the better, but the stubbornness in insisting in GRU remains.

Actually they have quite a focus city in BSB too, I think that could be developed into a very interesting alternative as it is nowhere nearly as congested as GRU.
 
C010T3
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 4:38 pm

Quoting RCS763AV (Reply 13):
Actually they have quite a focus city in BSB too, I think that could be developed into a very interesting alternative as it is nowhere nearly as congested as GRU.

No, BSB is more congested than GRU. GRU is nearing capacity on its runway system on some periods of the day, has gone way over capacity of the terminal and is reaching capacity on the parking stands. BSB has been operating beyond capacity even before GRU. The problem is not the runway system, but the lack of parking stands and the very constrained terminal. Unless, there is a plan to develop a hub bank during the night, there is no way AV will be able to develop something substantial there.

[Edited 2011-11-14 09:08:49]
 
UAL777UK
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 4:42 pm

Quoting LH506 (Reply 10):
will they start fighting for GOL and convince them that joining Star instead of ST is in their best interest

Is there a timetable in place for GOL to join ST, have they signed anything confirming they will join? If not Star shoould fight for them!
 
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 4:57 pm

Quoting C010T3 (Reply 14):
No, BSB is more congested than GRU. GRU is nearing capacity on its runway system on some periods of the day, has gone way over capacity of the terminal and is reaching capacity on the parking stands. BSB has been operating beyond capacity even before GRU. The problem is the runway system, but the lack of parking stands and the very constrained terminal. Unless, there is a plan to develop a hub bank during the night, there is no way AV will be able to develop something substantial there.

So why not develop GIG then? Not slot restricted, a nice and growing O&D market (albeit not as large as Sao Paulo), more and more airlines flying there from abroad who'd be able to feed them, including Star members like United, COPA, Lufthansa, TAP, I think soon South African.

So why ever would they favour Brasilia over GIG?
 
C010T3
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 5:06 pm

Quoting mozart (Reply 16):
So why not develop GIG then?

That's beyond me and everybody I know.
 
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 5:10 pm

So, if TAM switches to oneworld ... what will beb LHs Star Alliance codeshare partner in South america, especially SCL? Will LX, or even LH return to SCL with their own equipment?
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C010T3
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 6:03 pm

Quoting lh526 (Reply 18):
So, if TAM switches to oneworld ... what will beb LHs Star Alliance codeshare partner in South america, especially SCL? Will LX, or even LH return to SCL with their own equipment?

Only if it's justified by significant demand at SCL. Otherwise, it would be easier to cooperate with O6 on a possible GIG-SCL.

[Edited 2011-11-14 10:07:46]
 
kiwiandrew

RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 6:12 pm

Sorry, but even as a diehard *A fan, I simply do not see *A winning this one. If the takeover of TAM by LAN goes ahead the pants will be worn by LAN and the decisions made in SCL. While I have seen some unlikely things over the years in this industry, and have sworn to never say "never" I honestly can't see LAN deciding to move to *A even if *A decided to act in bad faith with AV/TA and rescind their invitation.

Of course we still have to see what CADE have to say, wouldn't it be funny if they approved the takeover but put a condition on which was totally at odds with the Chilean authorities conditions, e.g, we end up in a situation where Chile says one of them must leave their current alliance but Brazil says to preserve competitive balance we require that LAN and TAM remain in separate alliances'. ( I can dream, can't I ? )

[Edited 2011-11-14 10:12:33]
 
TeamintheSky
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 6:18 pm

Quoting ual777uk (Reply 15):
Is there a timetable in place for GOL to join ST, have they signed anything confirming they will join? If not Star shoould fight for them!

I follow the Team pretty closely, and nothing like this has happened. GOL's latest comments said they planned to follow a strategy like AS which was codeshare with a number of people. While Michael Wisbrun (head of Skyteam) has openly talked about their number one priority being to sign up carriers in India and Brazil, it sure doesn't seem to be happening any time soon.
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 8:47 pm

LANTAM will greatly benefit from OW. They have to much of a presence at OW hubs at MIA (AA) and MAD (IB). AA would take a huge loss if LANTAM moves over to *A because South America is their gravy train. Plus, QF switching from EZE to SCL steps up their commitment to connections on LAN. OW cannot afford to lose LAN and LANTAM will benefit much more from OW than *A. TAM will be a loss to *A because they will not have nonstop service to Brazil anymore. They will survive in South America by having Avianca and TACA.
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RCS763AV
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 8:51 pm

Quoting lh526 (Reply 18):
So, if TAM switches to oneworld ... what will beb LHs Star Alliance codeshare partner in South america, especially SCL?

BOG is a very viable alternative point for flying SCL-Europe. A total flight time of 16 hours combined to FRA isn't too different than flying via GRU. Also, if LH starts flying to LIM, TA can gladly take their passengers on to SCL.

Quoting C010T3 (Reply 14):
No, BSB is more congested than GRU.

I didn't know the terminal space in BSB was so dire. Runway wise though BSB has plenty of room for extra operations, GRU not so much as you pointed out.

Quoting mozart (Reply 16):
So why not develop GIG then?

Well the airline hasn't actually taken a huge expansion step ever since the F100s came online (2005-2006), so I would imagine that in the next round of expansion those airports with more available slots will be receiving the extra flights. They are focusing on making the operation profitable which according to O6's CEO will be accomplished next year (losses for 2011 have been minimal), and I would imagine that once that goal is reached combined with the change in ownership legislation they will start expanding further.

I honestly don't see LATAM staying in Star either. What LAN has with AA and IB is too valuable to throw away, having your partners have hubs in each one of the largest O/D destinations for Latin American travel is just too good a position to trade for maybe a larger alliance which doesn't really have a presence at Miami or Madrid and whose hub in the NY area is not where most of the latin traffic concentrates.

I actually think that AviancaTaca will regret making the decision of joining star alliance for many reasons including 1. Being considered a second tier carrier which Star publicly states they can boot in favor of a larger airline, when they are far form that (no carrier with over 140 aircraft and over 100 destinations should be considered second tier), knowing they would be much more valuable to Skyteam for example 2. Having your main competitor in the same alliance (CM), clearly favorited by it's largest member UA because of the CO days 3. Not having strong partners at the main latin hubs (Skyteam even does a better job at this with a large presence at JFK and UX at MAD). But TA's executives along with LH pushed so hard for the decision that it was finally put forward, AV even dropped a very strong partnership with DL and FF agreements with AF. It would seem a time where LH's credibility is at stake.

In fact, and may I post a hypothesis, Skyteam might become the biggest winner in this turmoil. If LATAM goes with Star, it will mean AviancaTaca get the boot and they would certainly go to Skyteam as their first choice due to past agreements. And even if they don't go for star, this whole episode is surely leaving a sour flavor in the mouths of AviancaTaca's executives, who might decide to jump ship after Star's act of bad faith. And I know Sky would be more than glad to welcome them back, as they really got the last of the leftovers with AR.
 
C010T3
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 9:19 pm

Quoting RCS763AV (Reply 23):
And I know Sky would be more than glad to welcome them back, as they really got the last of the leftovers with AR.

I agree and, after all, AV-TA could work well with AR.
 
eastern023
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 9:46 pm

Quoting lhr380 (Reply 1):
Tam/Lan fly to the major Onewolrd hubs, with great connectivity to the rest of the Alliance.

And this relationship had taken LAN years to build. I really don't see a last minute reversal, LANTAM is headed to OneWorld.

Quoting jfk777 (Reply 6):
LAN is too connected to OW, support in MIA & MAD are ard to replace.

Very true, I don't see LAN switching MAD to the over to FRA as their European gateway. FRA is overcrowded and (slot restricted?) LAN bread and butter is MAD and MIA. Why would you ax all this if you already have it in the bag....

Quoting lh526 (Reply 18):
Will LX, or even LH return to SCL with their own equipment?

I have been wondering the same thing. LH flew for years to SCL via GRU or EZE at times. (then LX), at some point I think they even flew 6X weekly on a LH 744. I think the big roadblock is the big almighty (at least at SCL) LAN. It would be an uphill battle to try to fight them. They have close to 60% of the traffic. I wonder if it makes sense to LH to to give the fight. Now that TAM gon; SCL will have no feeder, (at least not a real good one, with premium seats in the front, etc). I guess is wait and see. I hope that 2012 brings all these answers.

Quoting RCS763AV (Reply 23):
TA can gladly take their passengers on to SCL.

The question is would LH passengers gladly take TA? Coach passengers, maybe but the premium traffic would rather fly non-stop or on a (no offense) first tier airline.

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IrishAyes
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 9:59 pm

Quoting RCS763AV (Reply 23):
In fact, and may I post a hypothesis, Skyteam might become the biggest winner in this turmoil. If LATAM goes with Star, it will mean AviancaTaca get the boot and they would certainly go to Skyteam as their first choice due to past agreements. And even if they don't go for star, this whole episode is surely leaving a sour flavor in the mouths of AviancaTaca's executives, who might decide to jump ship after Star's act of bad faith. And I know Sky would be more than glad to welcome them back, as they really got the last of the leftovers with AR.

Interesting assessment. Are there indications to support that Star is leaning towards giving AV-TA the boot in desperate efforts to lure LATAM?
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:00 pm

Does Avianca have any long hauls to/from Brazil?

I would think a UA flight from EWR to GIG would be hole #1, then what to do about 2 & 3: London and Paris??

I'd have to go to Lisbon to get a Triangle flight!

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rising
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:54 pm

It would certainly be unfortunate for Star to see TAM say goodbye, but from the comments above it does indeed seem like is what will happen. I remember after Varig the major hole that Star had in South America, and how hard they worked to get that filled. It seems like the Plan B that's already in motion with Avianca/TACA might be the best last resort- or maybe GOL will have a change of heart.  

Either way it's interesting the changing dynamic where it's not as much about individual carriers, but the alliances.
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 10:57 pm

Quoting robffm2 (Reply 5):
Is it really unthinkable that Star will stop the process with Avianca/TACA?

Anything can happen when a heavyweight founding member starts flexing its muscle.

Quoting RCS763AV (Reply 23):
If LATAM goes with Star, it will mean AviancaTaca get the boot and they would certainly go to Skyteam as their first choice due to past agreements. And even if they don't go for star, this whole episode is surely leaving a sour flavor in the mouths of AviancaTaca's executives, who might decide to jump ship after Star's act of bad faith

Skyteam is where Avianca/TACA belongs.. Efromovich would have probably agreed but Kriete's personal obsession with beating Copa into Star predates their merger talks and for some reason he and his top execs went along.. perhaps Lufthansa (whose endorsement TACA enlisted early on) can now send out one of its emissaries to explain how circumstances have changed and persuade Avianca/TACA into voluntarily renouncing Star membership.
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 11:06 pm

Quoting eastern023 (Reply 25):
The question is would LH passengers gladly take TA? Coach passengers, maybe but the premium traffic would rather fly non-stop or on a (no offense) first tier airline.

None taken. Of course premium pax prefer to fly non-stop, but apparently there are not enough premium passengers to sustain a non-stop flight to SCL on Lufthansa. But the fact is TA is not a second tier airline, and that's where your statement falls short. They can provide a much better shorthaul business class service than all of the european carriers, starting with real J seats on their aircraft and AVOD being implemented through the whole fleet.

Quoting IrishAyes (Reply 26):
Interesting assessment. Are there indications to support that Star is leaning towards giving AV-TA the boot in desperate efforts to lure LATAM?

No, not really. Business wise it would be very stupid to do so. Who would guarantee them that LATAM will choose them after? And what precedent would that leave even with the same LATAM on Star's commitment to it's applicants and members? They would better stick with OW and leave it at that, with all the many advantages OW has for them above Star.

Quoting VC10er (Reply 27):
Does Avianca have any long hauls to/from Brazil?

No. AV flies BOG-GRU daily on A330-200 aircraft (6h flight) while O6 operates the second flight every day on A319s. That's about as close as it gets to having long-haul. Plans are to do it in the mid term though, Synergy has a substantial widebody order which they have publicly stated is aimed at the expansion of long haul operation in Brazil and Colombia.
 
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 11:45 pm

Quoting RCS763AV (Reply 30):
Of course premium pax prefer to fly non-stop, but apparently there are not enough premium passengers to sustain a non-stop flight to SCL on Lufthansa.

That's not the reason. LH simply lacks the right a/c to operate a FRA-SCL route profitably.
 
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 11:52 pm

Quoting eastern023 (Reply 25):
Very true, I don't see LAN switching MAD to the over to FRA as their European gateway. FRA is overcrowded and (slot restricted?) LAN bread and butter is MAD and MIA. Why would you ax all this if you already have it in the bag....

Well, also just based on cultural/historic ties....Spain and Latin America are far more strongly connected than Germany and Latin America   Hence, why LAN also flies from UIO, GYE and LIM on their own metal n/s to Madrid, and IB flies to virtually every major Latin American country n/s from Madrid (moreso than LH does from FRA).

Quoting eastern023 (Reply 25):
I have been wondering the same thing. LH flew for years to SCL via GRU or EZE at times. (then LX), at some point I think they even flew 6X weekly on a LH 744. I think the big roadblock is the big almighty (at least at SCL) LAN. It would be an uphill battle to try to fight them. They have close to 60% of the traffic. I wonder if it makes sense to LH to to give the fight. Now that TAM gon; SCL will have no feeder, (at least not a real good one, with premium seats in the front, etc). I guess is wait and see. I hope that 2012 brings all these answers.

I think it's unlikely we'll see a return of any European Star Alliance carrier to Santiago anytime soon, and here are my reasons why:

1. Chile, while an important and prosperous market, can also be a tough one for European Airilnes due to it's smaller size, remote geographic location, and fewer cultural ties in common with European countries when compared to larger cities such as EZE, GRU, GIG, BOG and even LIM to an extent.

2. Santiago is an entirely OW-dominated market, and it's domestic feed is purely OW airlines. Beyond whatever traffic that AF and LA/IB currently carry over their respective European hubs, I don't see much else in terms of needing the likes of LH, SK, TP or LX to step in and scrape for market demand that may be nonexistent at SCL.

3. Just as a personal observation, the way the world is trending, global alliances are pretty much the norm these days and it's simply less risky to forgo challenging markets which could add little or neutral value to the overall network. Especially since airlines like Lufthansa are continually feeling the heat from the Middle Eastern carriers, which have been eyeing growth in Latin America big time recently. EK just placed another huge aircraft order and I can assure you SCL will come up on the radar eventually.

In summary, I think it is more likely we will see LH return to LIM soon, which can feed into their TA network, and that will be the best bet for SCL to get some semblance of a *A option to Europe. I also believe their is room for UA to recommence service to SCL from either EWR or IAH.

Quoting rising (Reply 28):
It would certainly be unfortunate for Star to see TAM say goodbye, but from the comments above it does indeed seem like is what will happen. I remember after Varig the major hole that Star had in South America, and how hard they worked to get that filled. It seems like the Plan B that's already in motion with Avianca/TACA might be the best last resort- or maybe GOL will have a change of heart.

Don't forget that UA once operated a hub to Latin America from MIA  
confidence is silent. insecurities are loud.
 
aircanada014
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RE: Star And Oneworld Fight For Latam

Mon Nov 14, 2011 11:52 pm

I was thinking since no one hasn't mentioned this before, could Star Alliance tell TAM not to merge with LAN? Whats the chance if Stat tell TAM not to go through the merger with LAN?

As of right now it will definately stay in Oneworld. Like others have said LAN is happy to stay and is committed of staying with Oneworld so its a big loss for Star.
 
RCS763AV
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 5:48 am

Quoting SCL767 (Reply 31):
That's not the reason. LH simply lacks the right a/c to operate a FRA-SCL route profitably.

There aren't enough premium seats to be filled in order to operate the route profitably on any of LH's aircraft. If there was enough premium demand and better yields it would be a different story, but these long thin flights are just not huge money makers. No one is saying the yields at SCL are trash, only that a much larger market size and better yields are needed for such a long route to be profitable.

I think Irisheyes had it better:

Quoting IrishAyes (Reply 32):
Chile, while an important and prosperous market, can also be a tough one for European Airilnes due to it's smaller size, remote geographic location, and fewer cultural ties in common with European countries when compared to larger cities such as EZE, GRU, GIG, BOG and even LIM to an extent.

Though I would tend to disagree on the cultural ties part. SCL has a lot of cultural ties to Germany, much more than LIM, GIG or BOG have. Flight's don't survive on cultural ties only though.

Quoting viaggiare (Reply 29):
Skyteam is where Avianca/TACA belongs.. Efromovich would have probably agreed but Kriete's personal obsession with beating Copa into Star predates their merger talks and for some reason he and his top execs went along.. perhaps Lufthansa (whose endorsement TACA enlisted early on) can now send out one of its emissaries to explain how circumstances have changed and persuade Avianca/TACA into voluntarily renouncing Star membership.

According to the CEO it is what the numbers said would be more profitable, but it's entirely possible that some TA top execs along with Kriete made the numbers "work" to push this idea to management in Bogotá (not their first time making a stupid stubborn decision and pushing for it, with other great examples being cutting LAX from BOG and Lifemiles' customer service). But LH has a big part to play here too. They launched flights to BOG, announced themselves as sponsors of the airline and offered a lot of incentives which apparently were larger than ST's, where AF and their sluggish manner of attracting new partners seemed to be a problem too (DL had to make most of the effort by themselves with some help from AM).

Also, there's no way LH would get AVTA to leave voluntarily without any kind of compensation, do you know how much money airlines have to invest in order to be part of an alliance?

Quoting IrishAyes (Reply 32):
Just as a personal observation, the way the world is trending, global alliances are pretty much the norm these days and it's simply less risky to forgo challenging markets which could add little or neutral value to the overall network. Especially since airlines like Lufthansa are continually feeling the heat from the Middle Eastern carriers, which have been eyeing growth in Latin America big time recently. EK just placed another huge aircraft order and I can assure you SCL will come up on the radar eventually.

Indeed.

Quoting aircanada014 (Reply 33):
I was thinking since no one hasn't mentioned this before, could Star Alliance tell TAM not to merge with LAN? Whats the chance if Stat tell TAM not to go through the merger with LAN?

Now that would be a first, and certainly impossible. Not only alliances don't have any saying in their members' financial decisions, LAN and TAM have already signed binding agreements and it's a great decision from the business standpoint, this will push both into the mega airline world which would have tough to achieve if kept as separate companies.
 
Byrdluvs747
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 5:50 am

One thing no one is mentioning is how the potential IAG purchase of TP factors into the LATAM decision. Dominating LIS and MAD with TP & IB in IAG could further cement LATAM remaining in OW. However, I could see CADE having an issue with OW dominating Brazil-Portugal traffic.

Quoting aircanada014 (Reply 33):
could Star Alliance tell TAM not to merge with LAN? Whats the chance if Stat tell TAM not to go through the merger with LAN?

Star can't dictate anything to JJ. How would they? If anything, I would think that trying to dictate to JJ would push them right into OW for sure.
The 747: The hands who designed it were guided by god.
 
SCL767
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 6:17 am

Quoting RCS763AV (Reply 34):

Quoting SCL767 (Reply 31):
That's not the reason. LH simply lacks the right a/c to operate a FRA-SCL route profitably.

There aren't enough premium seats to be filled in order to operate the route profitably on any of LH's aircraft. If there was enough premium demand and better yields it would be a different story, but these long thin flights are just not huge money makers. No one is saying the yields at SCL are trash, only that a much larger market size and better yields are needed for such a long route to be profitable.

A problem for LH was that LH had to deal with competition from LAN between SCL and FRA. The B-787-8s will make routes such as SCL-FRA and SCL-LHR viable for LAN.

Quoting RCS763AV (Reply 34):
Though I would tend to disagree on the cultural ties part. SCL has a lot of cultural ties to Germany, much more than LIM, GIG or BOG have. Flight's don't survive on cultural ties only though.

Chile does indeed have cultural ties with Germany, (and also Italy as well).

LAN has been operating scheduled flights between SCL and FRA for almost 40 years:

LAN Chile B-707-300s at FRA:


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Click here for bigger photo!

Photo © Alain Picollet


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Photo © Mick Bajcar



LAN Chile DC-10-30 at FRA:


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Photo © Marlo Plate - Iberian Spotters



Cargo yields also play a factor on certain flights operated by LAN. LAN Cargo also operates into FRA.

LAN Cargo B-777-F6N at FRA:

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Photo © David Hlousek

 
Burkhard
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 8:28 am

Quoting SA7700 (Reply 4):
With regards to market share, how do TACA and Avianca stack up to TAM and LAN in South America? Is it a "fair fight?"

It is uphill with bare hands against machine guns. Atleast in the prosperous southern 2/3 of South America.

Quoting mozart (Reply 16):
So why not develop GIG then?

The Problem of GIG is SDU. OD traffic goes into SDU which is over busy, and these connections are missing in GIG.

Quoting SCL767 (Reply 31):
That's not the reason. LH simply lacks the right a/c to operate a FRA-SCL route profitably.

Indeed this is beyond what even the A343X can do non stop with good loads.
But: The key to Latin America is neither in GIG nor in GRU nor in in BSB - it lies in LIS.

Quoting IrishAyes (Reply 32):
In summary, I think it is more likely we will see LH return to LIM soon, which can feed into their TA network, and that will be the best bet for SCL to get some semblance of a *A option to Europe. I also believe their is room for UA to recommence service to SCL from either EWR or IAH.

Both agreed, but if the likely decision will come and TAM leaves * for 1W, then LH has to take TAP as the Protugese Government offers it, and LIS is the best placed hub to connect to Latin America in Europe.

Quoting Byrdluvs747 (Reply 35):
Star can't dictate anything to JJ. How would they? If anything, I would think that trying to dictate to JJ would push them right into OW for sure.

All they can do is to make this change expensive - but all within those limits two partners on the market that will live together for another many decades have to accept.

Quoting SCL767 (Reply 36):
B-787-8s will make routes such as SCL-FRA and SCL-LHR viable for LAN.

The 787-9 maybe, but the 787-8 does not have the legs, it runs out of fuel even before the A343X does. Once a long range version of it comes maybe, but the first years it will only do what the A332 does.
 
SCL767
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 8:41 am

Quoting Burkhard (Reply 37):
but the 787-8 does not have the legs, it runs out of fuel even before the A343X does. Once a long range version of it comes maybe, but the first years it will only do what the A332 does.

Are you sure about that? UA plans on deploying the B-787-8 initially on the IAH-AKL route.

IAH-AKL: 6444 nm
SCL-FRA: 6523 nm
SCL-LHR: 6280 nm
 
Burkhard
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 9:03 am

They will not fly Kiwis on that route. To what I expect from reading here, it will be on the edge of what it can do.

My Point is, if an A343 cannot do FRA-SCL with its larger range and full load in years of cheap fuel, the 788 will be streched just too much to make money. LON may be, also Paris may be, MAD or LIS for sure.
 
SCL767
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 9:35 am

Quoting Burkhard (Reply 39):
They will not fly Kiwis on that route. To what I expect from reading here, it will be on the edge of what it can do.

My Point is, if an A343 cannot do FRA-SCL with its larger range and full load in years of cheap fuel, the 788 will be streched just too much to make money. LON may be, also Paris may be, MAD or LIS for sure.

The Boeing 787-8 Dreamliner will have a longer range than the A-343, not to mention that it will consume significantly less fuel than the A343 and reduce maintenance costs. One of the reasons as to why LAN is committed to the B-787 program is that it will allow LAN to operate non-stop flights from destinations in South America, including SCL, to destinations in Europe with-out having to stop at MAD. LAN has 32 B-787s on order with options for 10 more B-787s. The B-787-9 will replace LAN's fleet of 5 A-343-313X a/c starting in 2014. Thus, by 2015 LAN will operate a long-haul fleet composed solely of Boeing a/c.
 
Burkhard
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 9:57 am

On the 789 I completley agree, that can do it, if it really gets the 10% improvement of efficency over first gen 788 Boeing promises. That is why so many have changed from 788 to 789. We have to wait for the hard facts still some months, how far the early ( pre 2013) 788 really can go with meaningful load.
 
SCL767
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 10:06 am

Quoting Burkhard (Reply 41):
We have to wait for the hard facts still some months, how far the early ( pre 2013) 788 really can go with meaningful load.

LAN only has two of the early build B-787-8s on order; the other 18 B-787-8s that LAN has on order will not require re-work. LAN has 20 B-787-8s on order and 12 B-787-9s on order and expects to receive the first few B-787-8s during Q4 of 2012.
 
Worldliner
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 10:09 am

Can't see past Oneworld here, they already have LAN and as others have said, they really only fly to Oneworld hubs. It would be silly for LATAM to join Star, although bigger, they are better suited to Oneworld in my opinion.
@777Worldliner
 
SCL767
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 10:22 am

Quoting Worldliner (Reply 43):
Can't see past Oneworld here, they already have LAN and as others have said, they really only fly to Oneworld hubs.

Certain oneworld alliance carriers also have a significant presence at LATAM's future hubs and focus cities, (excluding AEP and ASU). LATAM Airlines Group S.A. will operate major hubs at BOG, GIG, GRU, LIM, and SCL, with focus cities at AEP, ASU, EZE, GYE, MAD, MIA, and UIO.
 
C010T3
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 1:59 pm

Quoting Burkhard (Reply 37):
The Problem of GIG is SDU. OD traffic goes into SDU which is over busy, and these connections are missing in GIG.

SDU is no longer a problem for GIG. The growth of the traffic in Rio and the congestion of other airports have taken care of that.
 
eastern023
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 2:45 pm

So LAN and TAM just filed an F-4 form with the SEC here in the U.S. to create a limited partneship to exchange shares. This is seen as another step towards merger. Another step closer for TAM to OneWorld. Article mentions that "technical work" is already in progress to join both carriers...

Here is the link in Spanish, Will look for the English one and re-post. Nothing on Bloomberg or Reuters so far...

http://www.emol.com/noticias/economi...-de-registro-a-la-sec-de-eeuu.html

Greetings,

Rudy from IAD.
AA will Rise Again!
 
RCS763AV
Posts: 3654
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 3:13 pm

Quoting Burkhard (Reply 37):
It is uphill with bare hands against machine guns. Atleast in the prosperous southern 2/3 of South America.

Let's not exaggerate. First of all, northern south america is just as prosperous as southern south america, and in fact while the economy of the southern cone developed before, the room to grow there is shrinking, wile Colombia, Ecuador and Peru still have very good economical growth numbers in their dynamic markets with huge sectors of the population which still haven't been able to afford flying at least once a year. That's where the real growth is going to be, AVTA know it as does LAN.

Second of all, AviancaTaca are backed by their majority owner the Synergy group, which is a multibillion dollar conglomerate involving businesses in oil extraction and production, freight and passenger transportation by land and air, hotels and agriculture throughout the continent with their main interests located in Brazil and Colombia. So it's not a fight of bare hands against machine guns. The only fact is AVTA will be smaller than the combined LANTAM, but they're a profitable company with an owner that has very deep pockets.

Quoting Burkhard (Reply 37):
But: The key to Latin America is neither in GIG nor in GRU nor in in BSB - it lies in LIS.

May you elaborate? LIS has almost zero O/D traffic to anywhere in the region besides Brazil and Venezuela. So while these two markets may represent 220 million passengers, the rest represent 330 million people who won't by flying to LIS but rather to MIA and MAD.
 
SCL767
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RE: Star And Oneworld Fight For Latam

Tue Nov 15, 2011 3:41 pm

Quoting RCS763AV (Reply 47):
Let's not exaggerate. First of all, northern south america is just as prosperous as southern south america, and in fact while the economy of the southern cone developed before, the room to grow there is shrinking

Are you kidding me? Chile has implemented a series of economic policies over the past decades making Chile one of Latin America's most stable and prosperous countries, (just look at Santiago de Chile's growing skyline). Chile leads Latin American nations in many ares including, income per capita, globalization, competitiveness, economic freedoms, and has a very low perception of corruption globally. The Chilean economy continues to grow at a sustained rate and Santiago de Chile is also one of the leading financial centers in South America.
 
RCS763AV
Posts: 3654
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RE: Star And Oneworld Fight For Latam

Wed Nov 16, 2011 4:22 am

Quoting SCL767 (Reply 48):
Are you kidding me?

No one is kidding. While most of the population of Chile can already afford to travel by air, and it is a nation with only 17 million inhabitants, the maximum growth window has come and gone. There would need to be another economic upheaval of Chile and an unprecedented population spurt in order to sustain the level of growth they have had in the past recent years again, as their unfavourable location doesn't allo for a very large hub operation either. That doesn't mean a country like Chile won't keep growing it's passenger numbers, but it won't have the figures that other markets in the continent will experience.

Same case with Argentina and Uruguay. Brazil, due to it's sheer size and larger part of the population living in poverty will still see strong numbers as long as the economy keeps sustained growth.

On the other hand, Peru, a country with 30 million people which has a domestic aviation market as big as Chile's has much more room to grow and has a dynamic and prosperous economy with a lot of untapped opportunities. The aviation sector will se a splurge of new passengers flying to new destinations, with the LIM hub also being it the great position of the middle of south america, connecting norther pax to the southern cone and vice versa.