Copa Airlines today announced it has reached an agreement with United Airlines and Avianca Holdings (Avianca) for a joint business agreement (JBA) that, pending government approval, is expected to provide substantial benefits for customers, communities and the marketplace for air travel between the United States and 19 countries in Central and South America.
By integrating their complementary route networks into a collaborative revenue-sharing JBA, Copa, United and Avianca will offer customers benefits including:
- Integrated, seamless service in more than 12,000 city pairs;
- New nonstop routes;
- Additional flights on existing routes; and
- Reduced travel times.
“We’re delighted to further solidify our existing partnership with United Airlines and look forward to increasing service options for our customers by working more closely with Avianca,” said Pedro Heilbron, Copa Airlines’ CEO.
“We believe this agreement benefits our passengers by providing competitive fares and a superior network of more than 275 destinations throughout Latin America and the U.S., and also promotes tourism and investment in our region,” he said.
The carriers expect the agreement to drive significant traffic growth at major gateway cities throughout Latin America, which will help bring new investment and create more economic development opportunities for their communities.
“This agreement represents the next chapter in U.S.-Latin American air travel,” said Scott Kirby, United’s president. “We are excited to work with our Star Alliance partners Copa and Avianca to bring much-needed competition and growth to many underserved markets while providing a better overall experience for business and leisure customers traveling across the Western Hemisphere.”
Further, the carriers anticipate the JBA will provide customers with expanded codeshare flight options, competitive fares and a more streamlined travel experience.
Additionally, allowing the three carriers to serve customers as if they were a single airline is expected to enable the companies to better align their frequent flyer programs, coordinate flight schedules and look to improve the overall travel experience.
“We’re certain that together we are stronger in the United States–Latin America market than any of the three airlines individually,” said Hernán Rincón, CEO of Avianca.
“This partnership will allow Avianca to strengthen its position as a first-level player in the airline industry in America, as we will expand our scope in the continent with United and Copa, offering better connectivity to our customers,” he said.
Although JBAs around the world have been shown to benefit consumers and enhance competition, currently 99 percent of the U.S. carrier passenger traffic that makes connections in Central and South America does so without a JBA.
Competition in the Latin American-U.S. market has grown and includes a diverse set of carriers offering service across multiple price points. The agreement represents an innovative, best-in-class new product offering that the carriers believe will make competition in this robust market even stronger.
“Our analysis shows that the proposed JBA among Copa, United and Avianca will provide substantial benefits to consumers traveling between the relevant countries,” said Darin Lee, executive vice president of economic consulting firm Compass Lexecon, and an airline industry expert.
“The JBA will enable United, Copa and Avianca to compete more effectively, offer competitive fares and increase service, encouraging innovation and establishing a more robust and vibrant marketplace,” he said.
Regulatory approval process expected to conclude in 12 to 18 months
To enable the deep coordination required to deliver these benefits to consumers, communities and the marketplace, Copa, United and Avianca plan to apply for regulatory approval of the agreement and an accompanying grant of antitrust immunity from the U.S. Department of Transportation and other regulatory agencies. The parties will fully implement the JBA after receiving the necessary government approvals.
The JBA currently includes cooperation between the U.S. and Central and South America, excluding Brazil. With the recently concluded Open Skies agreement between the US and Brazil, the carriers are exploring the possibility of adding Brazil to the JBA.
Once approved, the JBA will enable deep commercial and strategic cooperation that will apply exclusively in the itineraries between Latin America and the U.S. contemplated in the agreement, but each of the three airlines will remain independent companies.