Measures LAN Must Take For TAM Takeover

September 22, 2011

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Chile's antitrust tribunal on Wednesday approved LAN Airlines' takeover of Brazilian carrier TAM. The merged airline must comply with a host of mitigation measures. Here are a few of the measures the tribunal has asked LAN to comply with for the merger to be approved:


The TDLC has requested the merged airline approve so-called "interline" agreements with other airlines interested in operating the key routes of Santiago to Sao Paulo, Santiago to Rio de Janeiro and potentially Santiago to Asuncion.

The regulator also would prohibit the new LATAM Airlines Group from increasing its number of monthly seats on the Santiago to Sao Paulo route within 15 minutes of slots ceded to competing airlines. Additionally, LAN has been asked to cede four of its flights to Lima to other Chilean airlines. Chile's regulator has also requested that LAN facilitate the entry of non-Chilean airlines into the domestic market.


LAN would have to cede four pairs of daily slots at Sao Paulo's Guarulhos airport to other carriers interested in launching flights or increasing their operations on the Santiago to Sao Paulo route, the TDLC has ruled. The regulator has also asked LAN to facilitate other airlines' access to Sao Paulo's Guarulhos airport and Santiago's Arturo Merino Benitez airport.


LAN or TAM would have to renounce at least one of the two global alliances to which they currently belong, according to the regulator's ruling. The merged airline would also have to end or revise its agreements with airlines that don't participate in the same alliances on some indicated routes.


Passengers flying on other carriers would have to be able to accumulate LATAM frequent flyer miles, according to TDLC guidelines.


The merged airline would not be able to give incentives or commissions to travel agents or distributors to boost sales.


LAN would have to modify its auto-regulation plan according to the TDLC's resolution.


LAN and TAM would not be able to increase cargo prices or ticket fares on the Santiago to Sao Paulo and Santiago to Rio de Janeiro routes until they had ceded four pairs of daily slots at Sao Paulo's Guarulhos airport.


The merged LATAM Airlines would have to maintain at least 12 directly operated return flights to the United States each week from Chile as well as seven direct daily return flights to Europe until it had ceded the four pairs of daily slots at Guarulhos.