LAN and TAM are finally combining into a single carrier. Sortof. The two carriers, plus their affiliate airlines, will operate under the LATAM brand starting in 2016, even as they remain independent operating companies to comply with the various legal and regulatory issues, particularly around domestic flight operations. What’s painted on the outside of the aircraft is marginally important, I suppose, but there are some who will be far more concerned about the future of the loyalty schemes going forward. And, at least for now, there’s a whole lot of nothing changing there. Jerome Cadier, CMO Groupo LATAM, was quite blunt in explaining that aspect of the brand integration:
This is something that we have been discussing and discussions continue. For now loyalty programs continue as is, with LANPass and TAM Fidelidade.
Cadier didn’t stop there. He actually explained why, and it is all about the Brazil market.
Any change has to go through a longer process because we have a situation in Brazil with TAM Fidelidade and MultiPlus. The process involves other companies of the group and it will be announced as we make the decision. For now they are separate.
The MultiPlus program is an earning and redemption scheme in Brazil tied to the retail market which happens to also be partnered with Fidleidade. Changing that relationship is unlikely to happen quickly.
The Brazilian market also differs from others in the way banking and credit cards are tied to the airline loyalty programs. The bank card programs typically offer transfers into multiple programs, similar to the Membership Rewards or Ultimate Rewards programs. It would be necessary for a new, consolidated program to remain a participant in those schemes in order to stay competitive. And it is unclear how that will work in a consolidated program.
On the plus side, there will be some improvements in the programs for members. Cadier promised, “We are going to give more and more [reciprocal] benefits but we are not going to have a single program as of today.”
So that’s both good and bad news, I suppose. No ability to merge accounts but also some slightly better integration.
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TAM (or the new LATAM) should face a lot of trouble in the following months, with more than half of the revenue in USD the company should see a major decrease in international travel from Brazil as the currency is facing a 10 year low against the US dollar.
Until recently, TAM has been trough an amazing past 10 years of huge profits coming from its US and European routes.
Unfortunatelly for them, the Brazilian currency (Brazilian Real) has lost almost half of its value within the past year and this certainly means trouble for LATAM.
Altough the domestic market in Brazil is very profitable due to extreme low competition, LATAM needs the income from its international routes to run a profitable business.
If TAM had not joined LAN, they would have been facing some serious financial problems in a near future.
Let’s wait and see, Brazil is going trough its worst economic crisis for the past 20 years and this cannot be good for the brand new LATAM.
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