LATAM Airlines deal with IAG, American threat to competition: Chile regulator

The logo of LAN Airlines, now known as LATAM Airlines, is seen at its office in Caracas, Venezuela May 30, 2016. REUTERS/Carlos Garcia Rawlins

SANTIAGO (Reuters) - Chile’s FNE competition regulator said a joint-business agreement that Santiago-headquartered LATAM Airlines inked with American Airlines Group Inc and IAG’s British Airways and Iberia risks increasing fares and lowering quality on routes.

The opinion, in a 163-page document elaborated by the FNE and seen by Reuters on Tuesday, could increase the chances that Chile’s TDLC anti-monopoly court nixes the deal.

The agreement between LATAM, American, and IAG seeks to help the airlines coordinate schedules and prices for flights, similar to the North Atlantic revenue-sharing agreement which already exists between IAG ICAG.L and American Airlines AAL.O.

“The present operation creates a risk of increasing fares and decreasing the quality of routes encompassed in the geographical area of the agreement since both parties would be acting as a single economic agent, with important market participations,” the document said.

LATAM LAN.SN said in a statement that the agreement would benefit passengers with lower fares, access to a bigger network of destinations, better itineraries and flight connections.

In Chile, the TDLC, a separate judicial body, will have the final word on whether the agreement restricts or endangers competition.

“LATAM is confident that the TDLC will recognize the benefits of this agreement for Chile,” LATAM said.

Reporting by Felipe Iturrieta and Antonio de la Jara; Writing by Anthony Esposito; Editing by Alan Crosby