Avianca, Copa and United airlines are into a deep discussion about their collaboration, the alliance game in Latin America continues with Avianca airlines, the discussion is about creating a closed three-way alliance to strengthen their position between United States and Latin America.
United Airlines and Avianca is involved in this discussion from last one year to establish a potential collaboration as one world partners, LATAM airlines and American work to forge their joint venture, on the other hand, Azul, has also expressed the desire to Joint Venture with United airline group, and aims to forge a similar collaboration with TAP.
Which give United and Copa deep tie, Copa also joined the discussion with United and Avianca to form this tie up. Currently, Copa is operating in 13 major US destinations including Panama City, which is a powerful point to consider to create a Joint Venture between the three.
Azul Airlines Continues to maintain that An JV with United will Materialize
If reports are to be believed talks heat up between these three companies in between Azul airlines continues to believe its venture with United will eventually materialize.
Star Alliance partners Avianca and United have been engaged in talks about establishing a joint agreement for more than a year. The discussion is against the LATAM Airlines which is the chief regional airline company and indeed a powerhouse in the aviation market of Latin America. LATAM airlinesare working to forge the alliance with one world, American Airlines, and IAG.
Oneworld still not got the permission from all the countries which comes under this venture, which encompass their respective network between Latin America and the US and Latin America and Europe.
There are a lot of difficulties noticed in this alliance, Avianca has expressed an interest in merging with Brazil group Avianca Brazil which is the third largest airline group on Brazil. Synergy group is the largest shareholder in both companies, but they operate separately with some limited codes sharing. So, there is nothing yet to materialize, but if both Avianca does tie it will put question on United-Azul tie up.
Azul recently declared its desire to work with United to word towards US-Brazil joint venture. Executives of Azul airlines explained how United invested in Azul before open skies agreement between the US and Brazil.
Copabrings its powerful Tocumen hub to JBA talks with Avianca airlines and United airlines for alliance
As mentioned above if Avianca and Avianca Brazil mergeit will spark some issues between Azul and United though it is unclear if it would affect or not, meanwhile Copa has officially joined the discussion with fellow star partners Avianca and United. It is a prediction that tie-up between the three-airline group is difficult but it is not surprising that Copa has joined the conversation because United group and Copa has a long history. At a point of time Continental which is a part of United now owned 49% stake in Copa. United and Copa in the year 2016 opted to renew their alliance for five more coming years.
Copa has begun a certain level of heft to join the joint venture. It has transformed its hub at Panama City Tocumen into major transit point between North and South America. With this Tocumen passengers’ number is doubled from 2010 to 2017 from 7 million to 15 million. Copa holds approx. 87% seat share at Tocumen and 71% seat share between Central America and lower South America. Copa holds 23% seat share and Avianca share of the seat is around 23%.
The three-way joint venture covering the areas of Latin America and US. Data shows Copa operated to 13 US markets from Tocumen while Avianca operates to 12 markets from it hub which is Bogota, Avianca Peru which offers services from Lima to Miami, on the other hand, Avianca El Salvador operated between San Salvador and Miami.
If this joint venture will be successful the three companies Avianca, Copa and United could pitch powerful hubs in Panama and Bogota, which is home to Latin America’s third largest aviation market, but that will leave a gap in Brazil which is third largest airline market of the region.
Addon to this Avianca Brazil mix give the three partners coverage within Brazil, but Azul’s 124 aircraft fleet is more than double the size of Avianca’s 54 aircraft fleet. Although Azul airlines have expanded long-haul international service to the US and Europe during the last couple of years. Brazil’s domestic market represents nearly 97% of Azul’s departing frequencies.
Complexityin shifting alliance strategies in Latin America
There is still much to unfold in the changing joint venture of these companies in Latin America, and the latest complexity in this is the dream of LATAM airline to form a one world fortress to the US and Europe. Now the star alliance partners are working to respond to the changing dynamics in the region.
But there are some complexities to resolve for the formation of this venture between the three airline companies namely Unite, Copa and Avianca in order to create a right strategy to maximize value in their potential partnership.
AirlineInvestment and Foreign Ownership in Latin America Market
Latin American aviation companies have often suffered and faced various issues from the dominance of foreign airline companies in the aviation market. US airlines, notably have significant equity holdings and partnership in attempting to subdue some of the more difficult elements of competition.
This has been possible as several key Latin American countries including Mexico, Brazil, Chile, and Argentina have adopted liberal aviation policies, due to which owners has been significantly relaxed in several cases. Only some small number of states including those of CentralAmerica have resisted this trend. As the main Latin America economy emerges from this difficult situation experienced in past decades there is potential for foreign airlines to establish an even stronger bond.