Last week, American Airlines announced it had signed a letter of intent with JetSMART to create a trans-American partnership. American Airlines will be doing the heavy lifting of long-haul flying from Chile and Argentina while JetSMART would offer short- and medium-haul flying within the two countries. This partnership has the potential to be very successful as the market continues to heat up.
A routes perspective
American Airlines has a solid route network to South America. JetSMART mainly operates in Chile and Argentina, and American is a strong force in both countries.
From Dallas/Fort Worth (DFW), Miami (MIA), and New York City (JFK), American Airlines flies down to Santiago (SCL) in Chile and Buenos Aires (EZE) in Argentina.
JetSMART has a larger presence at SCL of these airports, as it is mainly a Chilean carrier. This allows American Airlines to market incremental onward connections out of Santiago to points across Chile, especially to secondary destinations. Here is a look at JetSMART and American’s combined route network in South America:
A good move from American Airlines for its customers
While American Airlines has a heavy brand presence in the United States, it is just as well-known across South America and flies to more points in South America than any other US airline. The carrier also has the largest market share in the region of all major US airlines. Several South American destinations even see multiple daily flights from American Airlines to its hubs. For example, next summer, American has currently filed twice-daily flights between Miami and Buenos Aires.
American’s frequent fliers in South America do not just have travel needs between the US and South America. Those customers also need to fly within South America, including to leisure destinations. Previously, American Airlines could allow its customers to redeem their miles or book travel and earn miles and status when flying on LATAM for the short- and medium-haul routes within South America. LATAM and American announced the end of their partnership as the former has announced a partnership with Delta.
To keep its South America-based frequent fliers, American needed to find a partner in South America. One of its first moves was to expand its partnership with GOL in Brazil. However, this left the airline without a partner to service destinations outside of that country.
Especially in Chile, LATAM’s home country, American Airlines had no other options for its local customers. For those passengers who needed to fly to the US on business during the weekday and then wanted to take their family to Easter Island, Buenos Aires, Cuzco, or see the Iguazu Falls using their miles, this became a shortcoming in American’s program. American is also expecting to take a stake in JetSMART, which could give it some leveraging power in JetSMART’s important decisions.
JetSMART’s strength as an LCC
JetSMART is a low-cost carrier (ULCC), but this could be an asset for American Airlines. Most of JetSMART’s routes are short enough where having a business class product would not necessarily be a huge shortcoming, and its all-economy positioning is great for the travelers going out on leisure trips.
American Airlines does not need a lot of connecting opportunities in both markets. While JetSMART will provide some incremental connections, the partnership is more about giving American’s frequent fliers an option when they need to fly in the region.
JetSMART is also a long-term opportunity. The airline is looking to begin flights in Peru and Colombia, which would help round out some of American’s continued lost connections and partners in both of those countries. Further, JetSMART purchased Norwegian’s Argentinian subsidiary, and there could be many opportunities in the country, which is known for dominance by Aerolineas Argentinas.
With Brazil, Colombia, Peru, Chile, and Argentina covered, American could end up, in a few years, with enough options to keep its frequent fliers tied to the airline. JetSMART may also turn to longer routes as it expects to receive 12 Airbus A321XLRs under Indigo Partners’ order placed in 2019. Indigo Partners has an extensive portfolio of low-cost carriers across the world, including Frontier and Wizz Air.
JetSMART is not LATAM, but no carrier could entirely replace what American lost with LATAM in South America. Instead, the airline is emboldened and expects to continue growing in the region. The JetSMART partnership could be an important enough asset in the coming years.
What do you think of American’s proposed partnership with JetSMART? Let us know in the comments!
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