The joint venture between Delta Air Lines and Latam Group recently approved by the U.S. Department of Transportation is expected to benefit cargo shippers through greater route offerings, efficiency and capacity.
The green light from regulators allows the companies to implement the deal initially struck in late 2019 and coordinate relevant operations.
The DOT’s Sept. 30 order said granting antitrust immunity to Delta and Latam, the largest carrier in Latin America, would benefit the public because alliances allow domestic carriers to allocate more capacity to the market than they otherwise would and that Delta likely would handle a greater share of the joint venture’s services.
Delta (NYSE: DAL) invested $2.25 billion for a 20% share of Latam.
The joint venture opens operational and commercial opportunities for cargo synergies. Antitrust immunity gives the companies the right to cooperate on pricing and cross-sell their respective networks, and use each other’s trucking networks and warehouses.
“They are a world-class cargo player. From a customer perspective, the combination is complementary in terms of networks, access to commodities in the South American market and being able to more broadly distribute cargo using the joint venture network,” said Robert Walpole, Delta’s vice president of cargo operations.
In an interview, Walpole noted that the joint venture’s scope is limited to cargo carried in passenger aircraft and doesn’t cover the 15 Boeing 767-300 freighters that supplement Latam’s passenger network. Delta Cargo is still able to transfer cargo to Latam’s cargo fleet through traditional interline agreements.
“We’re now working with our planning teams on how and where we will go about” integration, Delta’s cargo chief said.
Airfreight experts say the two cargo teams will also be able to drive efficiency and reduce costs in areas such as network planning, ground handling, ground transportation and marketing.
Walpole said the two companies need to evaluate how their truck feeder networks fit together and if consolidation is possible.
“With other joint venture partners there’s trucking network leverage, so we fully expect here in North America, in particular, there will be some opportunity for us there,” he said, noting that Latam’s hub is in Miami.
Delta also has joint ventures with Korean Air, Air France-KLM and Virgin Atlantic.
Latam’s 767 freighters also fit with Delta’s 767 passenger jets on trans-Atlantic routes from the perspective of having comparable lower deck space that would allow cargo to be easily swapped between them, according to logistics experts.
A U.S. bankruptcy court last summer approved Latam’s restructuring plan.
Chile, Latam’s home base, is a huge export economy with commodities such as salmon and fruit shipped by air.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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