American Adds Ultra Low Cost Carrier Jetsmart As New South American Partner

American Airlines will partner with and invest in South American ultra low cost carrier Jetsmart, which is owned by the same parent company as Frontier Airlines and Europe’s Wizz Air. Jetsmart operates coach-only densely configured Airbus A320 narrowbody planes from Chile and Argentina, serving 33 destinations.

Indigo Partners, which owns Jetsmart, is led by Bill Franke – the CEO of America West before current American Airlines CEO Doug Parker. Parker served as CFO for six years under Franke.

After American Airlines lost its pending joint venture with South American mega-carrier to Delta, they’ve been working to piece together new partnerships. They quickly partnered with Brazil’s Gol, which Delta was forced to walk away from in order to do their LATAM deal.

JetSmart began operations in 2017, and expanded to Argentina with the acquisition of Norwegian Air Argentina just before the Covid-19 pandemic.

American is the largest US carrier to South America, and these partnerships help provide connecting traffic for American’s flights as well as additional destinations they can sell to customers.

AAdvantage members will be able to earn and redeem miles on Jetsmart flights. However earning will be paltry, and the value of redemptions will be too, as the carrier is home to sub-$20 fares. To be sure, more options are better than fewer options, but this partnership is nothing to be excited about.

After receiving approximately $10 billion in direct taxpayer subsidies during the pandemic, American Airlines has approximately $20 billion in liquidity and they’re on a spending spree. They announced a billion dollars of electric aircraft. Now they’re taking a new stake in a foreign airline. Congress included stipulations on executive compensation and stock buybacks, but there are loopholes that continue to allow state-backed airlines to freely spend taxpayer cash. Money is fungible!

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