On Tuesday, Chile’s National Competition Authority announced that JetSMART and American Airlines had announced their intention to form a partnership through minority ownership of the US carrier. The two airlines signed a declaration of intent last year to create “America’s broadest and most rewarding network.”
Continue your partnership
A little over a year after American Airlines announced an investment in JetSMART to facilitate its growth, the two operators asked Chile’s Fiscalía Nacional Económica (FNE) to review their past to continue the partnership.
The review request was submitted by the airlines on September 27, 2022, according to a document published by the FNE on its website this week. In this application, the investment fund Indigo Partners and American Airlines filed a request for “a merger operation consisting in the acquisition of a minority interest in JetSMART by American”. With this movement, on November 11, the FNE initiated the respective inquiry to allow the integration. The FNE is responsible for defending and promoting competition in all markets or productive sectors of the Chilean economy.
There is currently no further information available on the progress of the investigation opened by the Chilean authorities.
American Airlines and JetSMART partnership
In July 2021, American Airlines and JetSMART signed a letter of intent to launch a partnership that “would uniquely combine American’s full-service global presence with the complementary network of ultra-low-cost carrier JetSMART in South America.” This partnership would allow them to offer competitive fares and better travel options to passengers across the region.
When the two operators signed the partnership, JetSMART had a domestic presence in Argentina and Chile (in addition to some international services from those two countries). Since then, JetSMART has grown its presence throughout the region. The company has now opened a new base in Peru, is about to do the same in Colombia and has around 72 unique routes in South America.
Last year, Vasu Raja, American’s chief financial officer, said the partnership would allow JetSMART and American to grow aggressively and profitably in Latin America as demand recovers, while preserving the best aspects of each other’s business model. carrier.
In an exclusive webinar for Simple Flying last year, Vasu Raja added that American Airlines is looking forward to finding short-haul partners that offer end-to-end connectivity. The carrier cooperates with other companies, which tend to be smaller, more agile and agile; they can create a seamless customer experience with them.
Why is this partnership important?
Since the COVID-19 pandemic hit Latin America, we have seen an increase in airline partnerships and consolidation in the region. The three main operators in the United States – American, Delta and United – have equity interests and alliances with regional operators in Latin America.
American Airlines has a small investment in Brazil’s GOL Linhas Aéreas and also operates the largest network from its hubs in Miami and Dallas Fort Worth; Delta Air Lines has strong partnerships with Aeromexico and LATAM Airlines (former US protégé); United Airlines has partnerships with Copa Airlines and Avianca.
Additionally, the region saw a failed hostile takeover of LATAM Brasil by Azul; the still-unsuccessful merger of Avianca, Viva Colombia and Viva Perú; the announcement of the holding company Abra Group Limited, of the IAG type, composed of Avianca and GOL; Chapter 11 Avianca, LATAM and Aeromexico and the appearance and disappearance of various carriers. The region is heading towards a consolidation trend, and American Airlines’ partnership with JetSMART aims to protect its interests and increase the North American carrier’s share.