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Star scrambles to fill Latin network void left by Varig

Star's decision to drop Varig leaves the alliance in a quandary over what to do in Latin America.

Varig's exit, coupled with the 2004 loss of Mexicana, leaves Star with no presence in the region. In contrast, rival oneworld is adding Latin members with this year's addition of more LAN affiliates, while Aeromexico and Copa belong to Skyteam.

Star's options in the region are limited. TAM, Brazil's dominant carrier, has repeatedly said that it is only interested in airline-to-airline alliances on specific routes. Even if it had a change of heart, TAM's closest allies are Air France and American Airlines, neither of which belong to Star.

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Star is being left behind by rival alliances in Latin America

Gol, Brazil's other major airline, strictly adheres to the low-cost model and has less interest in a global alliance than Star has in a low-cost member.

Beyond Brazil, El Salvador's Grupo TACA, Aerolineas Argentinas and Colombia's Avianca are all options, but none is a perfect fit. TACA codeshares with United and does not fly beyond the Americas. Aerolineas has shown no interest in aligning with anyone.

Avianca could be Star's best option. It is centrally based and codeshares with members of all three global alliances. But Bogotá may be a less attractive hub than some other Latin cities.

New Varig might be seen as a Star successor to Varig, but it is preoccupied with its own issues. A month after receiving its air operator's certificate, it was scrambling in January to meet a deadline to use or lose dormant domestic routes. It faces a similar mid-June deadline for international routes.

The vacuum created by old Varig's retreat from international service has largely been filled by foreign carriers. A year ago Brazil's airlines, mainly Varig, offered 53% of all international capacity. That has dropped to 27%, and TAM and Gol provide most of it.

New Varig's only route beyond Latin America is to Frankfurt. This year it hopes to add New York, Miami, London, and Madrid, plus an extension beyond Frankfurt to China. But New Varig appears focused mainly on rebuilding a network within Latin America and has little time left to do it.


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