American Airlines has recently signed partnerships and announced massive investments in Chile’s low-cost carrier JetSMART and Brazil’s operator GOL Linhas Aereas. The new deals are increasingly important to American Airlines to create a compelling customer offering in Latin America and consolidate its presence in the region. Let’s investigate further.
American Airlines wants to bolster its presence in Latin America. Photo: Vincenzo Pace | Simple Flying
Why does American need South American partners?
American Airlines is the biggest long-haul operator in Latin America. According to Cirium’s database, American Airlines will be flying to 35 destinations in 16 South American countries during October.
The airline has even added more capacity now than what it had pre-pandemic. American is putting 28.2% more flights and 31.3% more capacity to the region. Nevertheless, the carrier has been looking for new partnerships in South America.
In an exclusive webinar interview with Simple Flying, American Airlines’ CRO, Vasu Raja, said,
“What we’re hungry is for our short-haul partners to offer endpoint connectivity on the network; what we find working with any number of carriers that tend to be smaller, more agile, more nimble, is that we can go and create a very seamless customer experience petty quickly; we can innovate a lot faster and have reciprocal frequent flyer benefits.”
JetSMART is a Chilean ULCC that recently signed an alliance with American Airlines. Photo: Getty Images
The alliance with JetSMART
On July 29, American Airlines and JetSMART signed a letter of intent “to create the broadest and most rewarding network in the Americas.”
American proposed acquiring a minority ownership stake in the Chilean low-cost carrier. It also said that customers would be able to earn and redeem AAdvantage miles on JetSMART flights.
Regarding the American alliance with low-cost carrier JetSMART, Raja said,
“Our loyalty program will be the loyalty program of JetSMART. And as that airline scales out and can compete with higher cost legacy carriers in the region, that creates a real opportunity for us not just to get more connectivity, but offer our customers flights that American Airlines couldn’t offer.”
The alliance has been seen as a product of the COVID-19 pandemic because it made a low-cost and a legacy carrier join forces in an attempt to grow aggressively and profitably across Latin America as demand recovers.
GOL also has a partnership with American Airlines. Photo: Getty Images.
The alliance with GOL Linhas Aereas
In the past, American Airlines used to have an alliance with LATAM Airlines Group. But then, Delta Air Lines invested in LATAM, and American was left out of the equation.
Following that, American Airlines signed a new partnership with GOL Linhas Aereas. On September 15, 2021, both carriers signed a letter of intent to solidify their partnership.
Additionally, American Airlines announced a US$200 million investment in the Brazilian carrier. The US company will hold a 5.2% participation in the Brazilian carrier.
Vasu Raja said,
“GOL has an impressive network all through Brazil. Not only is it large, but it is large and really dense. They’re a great airline, we’ve working with them throughout the pandemic, and our partnership has continued to blossom. We’re keen to integrate even more deeply and, you know, (become) a single face to the customer. There are a lot of things, through this partnership, that we can do in Brazil.”
In conclusion, both alliances allow American Airlines to strengthen its footprint in Latin America. Also, it will enable American to keep the upper hand against other US competitors in the region. Let’s not forget Delta has alliances with Aeromexico and LATAM, while United is partnering with Avianca and Copa Airlines (and possibly Azul). American Airlines is doing the same, creating networks to keep on being, as they call it, a South American brand.
What do you think about American partnerships with JetSMART and GOL? Let us know in the comments.