MercoPress. South Atlantic News Agency

Chilean operators to seek Supreme Court ruling on Latam / American Airlines “cartel” agreement

JBA is tantamount to “authorising the largest cartel that has existed in the airline industry,” said ACHET's Lorena Arriagada.

The Chilean Association of Tourism Companies (ACHET) Monday announced it will take the question of the agreement of Latam Airlines with American Airlines and International Airlines Groups (IAG), which was approved last Wednesday by the Court of Defense of Free Competition (TDLC), to the Supreme Court, the Diario Financiero newspaper reported.

 In ACHET's view, the accord, known as JBA (Joint Business Agreements) would allow signatory companies to set the prices, itineraries, seat offers and share the profits of travel to the United States and Europe, and lead to an airline industry “cartel,” much to the detriment of other carriers.

“ACHET regrets the decision of the TDLC, since there is no doubt that this agreement will be extremely detrimental to free competition and to the entry of tourists into the country,” the grouping said.

In addition to that, “the alliance will allow these airlines to control 78% of the market on the route from Chile to North America and 64% of the market that unites our country with Europe, authorizing the creation of a completely undefiable cartel , it is unlikely that new players who can offer real and effective competition,” will enter these markets.

Although the TDLC set specific requirements to validate the agreement, ACHET estimates they will fall short of achieving their goal.

“There are no mitigation measures that can really avoid these risks. The only measure is competition,” ACHET said.

“It is [tantamount to] authorising the largest cartel that has existed in the airline industry and it will cause serious harm to consumers and national tourism,” said ACHET Manager Lorena Arriagada.