Brazil’s Senate has sanctioned the Open Skies agreement between the country and the United States, which essentially clears the path for a partnership between American Airlines Group Inc. and LATAM Airlines Group.
The treaty is expected to be signed into law by the President of Brazil, Michel Temer.
The pact makes way for an unlimited number of flights between Brazil and the US – which is considered to be a preferred hotspot by Brazilian tourists. This could possibly result in reduced airfares.
The pact is also expected to banner a renewed interest by the US’ airlines industry in the potentially lucrative Brazilian market.
The Open Skies treaty was initially inked back in 2011 but encountered stiff opposition from lawmakers lobbied by local airline interests in Brazil, who were wary of competition from US carriers.
The arrangement was a pre-requisite for the US Department of Transportation to give the green light on a business transaction between American Airlines and LATAM, the two major carriers in the region, which would see them coordinating schedules and providing more connections for air travellers.
Brazil’s anti-trust agency has already given its thumbs up for the joint venture. In 2016, Chile-headquartered LATAM signed the joint business agreement with American, and another with IAG’s British Airways and Iberia, all of which are members of the Oneworld Alliance.
American Airlines lauded the treaty’s approval.
“Open Skies agreements have proven to increase travel choices and enhance competition, resulting in greater benefits for consumers and positively impacting economic growth,” the airline’s statement read.
Brazil’s third-biggest airline, Azul Linhas Aéreas, had some reservations regarding the pact, claiming that it needed to establish itself in the Brazilian market first before the floodgates were opened to other carriers.
The treaty was backed by GOL Linhas Aéreas Inteligentes, Brazil’s second airline in which Delta Airlines Inc. has a 9.48% stake, and Avianca Brasil, which is looking to secure a business deal with United Continental Holdings Inc. soon.
Flights between Brazil and the United States are set to soar by 30% due to the Open Skies pact, said Brazil’s tourism board Embratur.