Since August 2010,
Chile-based Lan Airlines has been working to close a merger with Brazil's Tam
Lineas Aereas to form a South American aviation giant, the Latam Airlines
Group. The carriers secured approval from Brazilian regulators and await a
similar blessing from Chilean authorities. In the meantime, Lan, which includes
affiliates in Peru, Argentina and Ecuador, has added capacity between North and
South America, in part to capture growing corporate traffic from the United
States. Lan vice president of North America, Central America and the Caribbean
Pablo Chiozza last week during the Global Business Travel Association
conference in Denver spoke with BTN senior editor Jay Boehmer about the
carrier's growth, a new meetings program and the outlook for the Latam Airlines
Group. Excerpts follow.
Where does the merger with Tam stand right now?
We thought the biggest
issue was getting approval on the Brazilian side, but on the Brazilian side, we
are already set. Right now, we're trying to cover legal things in Chile to make
sure everything is covered and there's nothing left loose in this merger. We're
confident this will happen, hopefully between the fourth quarter of this year
and the first quarter of next year. We're looking forward to it.
Our networks are
completely complementary. We operate just two routes together—between Buenos
Aires and São Paulo, and between Santiago and São Paulo. For the other routes,
we have completely different operations, so it's a huge opportunity for us.
South America stands
for 5 or 6 percent of world traffic, but Brazil is half of that, so being in
Brazil is a huge opportunity for us, and it's a huge opportunity for Tam to
join Lan as well.
Lan participates in
Oneworld, and Tam is in Star Alliance. How do you plan to address that after the
merger?
If the merger happens,
we'll still operate as Lan—a company home-based in Chile—and they'll still
operate as Tam, with their base in São Paulo. The first thing is to just make
this happen, and then we'll see which alliance we are going to be in.
How has exit-U.S.
corporate business been trending to your key markets in South America?
As of August 2011, the
corporate traffic has been growing 10 percent compared with last year, so
that's very good news. We increased our capacity last year; we launched from
San Francisco to Peru—the only airline serving South America from San
Francisco. The corporate business is going pretty good so far. It's not only
about the U.S. economy, but about U.S. businesses developing down there. Latin
American economies—though I wouldn't say they're booming—they're doing pretty
well right now.
U.S. airlines are
expanding service to South America. Are you seeing more competition?
We've been increasing
capacity to the U.S. over the past 10 years. We just opened a new gateway with
San Francisco, and we increased our capacity to daily flights from New York to
Santiago as of March this year. We now have four gateways from the U.S.: San
Francisco, New York, Los Angeles and Miami. In those markets we are still
leading service to South America.
The biggest growth
right now is within South America. We operate domestic services within
Argentina and Peru. We operate domestic in Ecuador. In South America, we serve
more than 60 cities. Our regional business has been growing 30 percent in terms
of available seat kilometers this year. We're still growing our long-haul
flights, but we're growing at a faster pace within South America. That's
something U.S. carriers can't do.
Tell me about Lan's
new meetings and incentive program.
We have a corporate
sales team, but we didn’t have a dedicated person for meetings and incentives.
We do have one now. Argentina and Brazil are the biggest markets in South
America for meetings and incentives, and we have a nice offer out of the U.S.
to those countries. We're confident that we're going to make huge business out
of the U.S. to South America in terms of meetings and incentives.