Brazil's ANAC approves LAN-TAM merger

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Brazil's Star Alliance carrier TAM has received the authorisation from the country's Civil Aviation Authority (ANAC) to proceed with its merger with Chile's Oneworld member LAN Airlines.

This decision brings both airlines one step closer to creating Latam, the proposed umbrella company under which both companies hope to be operating jointly by 2012. However, the ANAC only evaluated operational and safety issues, and was not expected to oppose the merger.

The next hurdle for TAM is gaining the approval of anti-monopoly watchdog CADE, which is in charge of guaranteeing free market access to competitors and safeguarding competition in the Brazilian market.

On the Chilean side the consumer association CONADECUS obtained earlier this year a court order to study both the effects of the merger on direct routes between Chile and Brazil and the general market impact on the Chilean domestic market and South American regional markets. Although the Chilean resolution has not yet been published, sources familiar with the process are not expecting major obstacles.

TAM and LAN announced soon after their intent to merge a willingness to give up frequencies and slots on their direct hub-to-hub routes, namely Santiago de Chile to Sao Paulo and Rio de Janeiro in Brazil and to Asuncion in Paraguay where TAM is also the dominant operator through its TAM Mercosur subsidiary.