NEW YORK – The recent purchase by Delta of a 20-percent share of LATAM Airlines for $1.9 billion has turned into one of the most aggressive and strategic moves to dominate the skies over the Americas that has yet been seen.
The maneuver seeks to establish a dominant position in the Americas’ air transport market given the size of both companies, in a year when other companies of the sector like Avianca are having their ups and downs.
The accord between these giants of the air seems to signify the creation an organization with leadership in the interconnecting of the Americas, thanks to their respective percentages of participation in the hemispheric market, with Delta based in North America and LATAM in South America.
OWNERS OF THE AIRWAYS
In the United States, Delta is the third largest player in the airline market with 17.2 percent of the share, after American (17.7 percent, former partner of LATAM) and Southwest (17.4 percent), according to the US Bureau of Transportation Statistics (BTS) as of June 2019.
United, which merged with Continental in 2010 in an operation worth some $3.2 billion, occupies fourth place with a participation of 15.1 percent, followed by Alaska, JetBlue, Spirit, Frontier, SkyWest and Hawaiian Airlines, which together have a 20.5 percent piece of the pie.
According to BTS, as of June 2019, US airlines had flown some 790 million passengers to domestic and international destinations.
In Canada, the position of the national flag carrier Air Canada is more than dominant, with 53 percent, followed far behind by WestJet with 37 percent, and others with a total of 10 percent, according to Canadian aviation authorities.
LOW COST FLIES HIGH
In Latin America the national flag carriers have fallen behind the conglomerates, while low-cost airlines are taking over the market.
LATAM is the leader in the area with 18.1 percent, the CAPA Centre for Aviation announced last Sept. 2.
GOL, the second-largest Brazilian Airline, a low-cost outfit with 15 percent of the South American giant’s international traffic, is followed by LATAM in the region with 9.7 percent of market share.
Another low-cost Brazilian airline, Azul, property of United States entrepreneur David Neeleman, has won 7.6 percent of the share, while Avianca, the second-oldest airline on the planet after KLM and in the midst of a restructuring process, has 7.4 percent
Last Aug. 27, Avianca Holdings, the holding company of Avianca, denied that the company was “bankrupt,” as its president, Roberto Kriete, was heard to say in a recording of a meeting with a group of employees that was leaked to the press.
Avianca Holdings had a net loss of $475.9 million in the first half of 2018, while during the same period the year before it had been $31.97 million, according to its balance released last Aug. 15.
Volaris, another low-cost airline based in the Mexican city of Tijuana and which flies to medium-range destinations in North, Central and South America, has a 5.3 percent share.
The first national flag carrier in this market ranking in Latin America is Aeromexico with 5.1 percent, while American Airlines, the “royalty” of the US airways, has a scant 3.8 percent share.
With Delta’s new stake in LATAM, the battle for the airways of the Americas becomes more difficult for medium-sized competitors, while the low-cost airlines continue their limitless search for travelers living on a fairly tight budget.
The fluctuating oil market and the new flight conditions as the climate-change crisis develops are two of the factors that will affect the results of this new chapter in air transport.