American Airlines, LATAM file for JV antitrust immunity

The cargo operations of American Airlines and LATAM could soon be integrated into the airlines’ “metal neutral” alliance, which allows both carriers to book passengers, and potentially freight on the same route and share the revenues regardless of the operator for each flight.

Under the terms submitted on May 16 to the U.S. Department of Transportation (USDOT) by the two airlines, the carriers would use each other’s fleets and facilities to move freight along select routes. This development sets in motion, “the first broadly immunized joint business operating between North and South America.” Once enacted, the two airlines anticipate a reduction in fares of up to 28 percent on connecting itineraries, according to documents submitted in the filing.

Last week’s filing with the USDOT “contemplates the potential for cooperating in the transportation of cargo products and services throughout the joint business.” Similar joint ventures (JVs) have allowed carriers like All Nippon Airways (ANA) and Lufthansa to move cargo on a larger and faster network, thanks to more direct flights, destinations and frequencies. In the filing with the USDOT, the airlines pointed out that other carriers, such as United, are moving towards an “enhanced code-share agreement.” Using U.S.-Brazilian carriers as an example, the filing argues that without taking advantage of their combined capacity, American Airlines and LATAM would be “significantly disadvantaged,” relative to other carrier alliances, such as the JVs created between Delta and GOL Airlines, or United and Azul.

American Airlines and LATAM are not the only airlines filing for antitrust immunity on routes connecting through the U.S. On May 9, United filed with the USDOT to code-share with Singapore Airlines (SIA) between Singapore and eight locations in the U.S., starting July 2016, according to the CAPA Centre for Aviation. Ultimately, the two airlines are seeking blanket approval on all United routes beyond SIA’s U.S. gateways and vice versa.