A Blueprint for American in Latin America
Last week I wrote about how American’s loss of LATAM as a partner wasn’t necessarily a problem from a commercial point-of-view but rather from a strategic and management point-of-view. Today, I’m going to dive deeper into the network to show exactly what I meant. It’s story time, but instead of a book, I have one of my favorite tools on Earth, the Great Circle Mapper.
Let’s start by comparing the current route maps for Delta and American. This shows all routes from the US to South America. (Yep, I’m ignoring the Caribbean/Mexico/Central America since LATAM doesn’t really help either airline with that.)
I’ll admit that even I was surprised at the stark difference between these maps. Delta has almost no presence in South America except for in the largest of cities, and it only serves the continent from two of its hubs. Having LATAM as a partner will be a game-changer for Delta in that it will provide huge connectivity not just to smaller cities but also to larger ones like Montevideo or Guayaquil. It will also give Delta more heft between the US and South America with LATAM’s metal. The additional feed should help Delta add more nonstop service into South America as well. This is great news for Delta customers.
But when you look at American’s map, you see it already has outstanding coverage in South America, and not just from Miami as you’d expect. Dallas/Fort Worth has proven to be a particularly good gateway as well. Though the coverage is quite good, there are still large swaths of the continent that remain uncovered, and that’s where American could use help from new partners.
Brazil is a particular point of focus here. If we look solely at American’s Brazil presence we see it is now down to only four cities.
That leaves much of the country uncovered without LATAM. To be fair, many of the cities that aren’t served by American are smaller, and they’re more important for Latin origin than US origin, but it’s not all like that. Think of places like Recife, Fortaleza, Belo Horizonte, Iguassu Falls, etc. Those are places where American would want a presence.
Now imagine a world where American picks up the stake in Gol that Delta is selling and works with the airline to offer true feed for American’s network. Just look at these four cities as connecting points (and assuming Gol and American can work together to coordinate connecting times), you see a very different story.
I had to remove the city names, because there are just SO many cities that Gol serves from those four points alone. It’s easy to dismiss Gol as the small low-cost carrier it once was, but that is far from reality today.
Beyond giving American instant access to every city it could ever want in Brazil (and in nearby countries), this network could also potentially help American expand into additional Brazilian cities nonstop from the US. That’s especially the case as the A321XLR comes in line in the next few years. Gol would be a great partner in that American would provide the long-haul and Gol could handle the short-haul. It is a more complementary partnership compared to American-LATAM.
But this only really helps with Brazil . You can see there is still a huge gap in northern South America. American has pulled back in that region as economics have worsened. It can no longer justify flying to Bolivia or Venezuela at all. (Bolivia service ends next month.) This is where a bolder move is in order.
If American can coax Copa away from United, it would perfectly fill the gap. Considering United owns a piece of Avianca and Azul, Copa must feel like a third choice, so there should be an opportunity here. Let’s zoom in on South America. Here you can see Gol’s network from the 4 American gateway cities in Brazil as well as Copa’s network to the south from Panama City.
That’s one heck of a network. The gaps you see between Brazil and the northern part of South America are filled with a whole lot of jungle. In other words, this partnership would cover nearly everything with the exception of points in Chile and Argentina. American could certainly find local options to cover those areas if needed, but it may be that American, Copa, and Gol could serve most of what they need in those countries without additional help.
Argentina, in particular, is an awful place to partner since most international flights come to Ezeiza while domestic flights depart from Aeroparque. If you can overfly Buenos Aires and connect in a single airport, then you have an advantage.
Now, put this all together with Copa’s North American network. If you assume that American would connect Charlotte, Dallas/Fort Worth, Philadelphia, and Phoenix into Panama City, you have one heck of a map here.
This doesn’t even consider future potential of those A321XLRs into long, thin markets.
Putting together maps makes it sound all nice and easy, but of course, it’s not. Well, I take that back. The piece with Gol is probably pretty easy now that Delta has cast it off. Copa, however, is a different story. It requires American’s management to paint a strategic picture of the benefits for Copa. It needs to develop that relationship and sway the airline to make a move.
Ties run deep between Copa and United going back to the days when Continental owned half the airline. It won’t be easy. But then again, pulling LATAM away from American wasn’t easy for Delta. American’s charge is to articulate a clear vision and get Copa what it needs to succeed. This is where American needs drive, energy, and momentum. The end result could be better for American than what it had before.
