Chilean regulators have tentatively approved the LAN / TAM merger (which is really LAN buying TAM) with the usual provisions and conditions that frequently come with these deals.  The big one is that LANTAM must pick one airline alliance to go forward with. 

Right now, that means choosing between Oneworld or Star Alliance.  LAN is associated with Oneworld and TAM is associated with Star Alliance.  The choice means that one or the other kind of gets shut out of South America so the stakes are big.

Expect both alliances to make captivating pitches for being the winner and both will likely promise exorbitant revenues (via guarantees) to the airline group but who is the best choice?

For LANTAM, either could be good but I think Star Alliance might look just a little bit more promising in terms of synergies.  Oneworld won’t be shut out with a fight but you have to evaluate that alliance on performance and its “majors”.  American Airlines, British Airway, QANTAS and Cathay Pacific run that group and none of those airlines is the picture of health or innovation.

Star Alliance might offer more synergies, more partners and, more importantly, more money going forward.  It’s an alliance that works well and which is more egalitarian in its treatment of smaller partners than Oneworld.

On the other hand, Oneworld fits the Chilean portion of the airline very well already and several partners service Brazil with high frequency too.  If LANTAM is smart, they’ll extract promises to cooperate and a seat at the big boys’ table.  That would give them the leverage they need going forward.  If Oneworld appears unwilling to acknowledge them as a player, you can bet that Star Alliance will be happy to make room for them.

Filed under: Airline News by ajax
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