May 23, 2019 / 7:39 PM / a month ago

Chile high court rejects LATAM route deal with American, BA and Iberia

SANTIAGO (Reuters) - Chile’s Supreme Court on Thursday struck down a proposed deal on routes between carriers LATAM Airlines, American Airlines, British Airways and Iberia, upending an agreement meant to reshape international air travel in Latin America.

The decision comes more than two years after the carriers announced their plans, termed a joint business agreement. At the time it was seen as a bold move to save costs, coordinate prices and run routes more efficiently, but also raised antitrust concerns.

“We are in the presence of an agreement between competitors ... who individually each have relevant market shares and who would acquire a joint market power that would be hard to challenge in a post-deal scenario,” four judges wrote in their decision.

LATAM said in a statement it was “surprised” by the decision and that it was a “step backward” for Chile.

The carrier added it was considering continuing to pursue the deal, but without the involvement of Chile. Authorities in Uruguay, Colombia and Brazil all approved the deal last year, which does not involve any transfers of money between the airlines.

LATAM shares closed 0.34% higher in Santiago, in line with the broader Chilean benchmark index.

The decision in Chile, which applies to the four OneWorld carriers, could also spell trouble for a separate group of airline competitors in the Star Alliance grouping, which had announced a similar deal of their own to take on the LATAM alliance.

In late 2018, U.S.-based United Airlines, Colombia’s Avianca Holdings and Panama’s Copa Airlines announced a joint business agreement to share routes across Latin America. That deal is also awaiting regulatory approval, but is at a much earlier stage.

Chilean consumer advocacy group Conadecus appealed the initial regulatory approval last October over concerns it could increase fares but lower quality on routes.

Reporting by Erik Lopez; writing by Dave Sherwood and Marcelo Rochabrun; editing by Jonathan Oatis, Sandra Maler and G Crosse

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