Brazil's House of Representatives has approved an Open Skies agreement with the United States paving the way for the approval of a joint business agreement between LATAM Airlines Brasil (JJ, Sao Paulo Congonhas) and American Airlines (AA, Dallas/Fort Worth).

If acceded to by the Brazilian Senate, the treaty would remove the limit on the number of flights that can be operated between the US and Brazil and would open the market to new entrants. It was first signed in 2011 but has stalled due to the opposition from some Brazilian carriers, including Azul Linhas Aéreas Brasileiras (AD, Sao Paulo Viracopos), Reuters reported.

Before entering into force, the agreement needs to be ratified by the Brazilian Senate. This should occur during the first quarter of 2018.

The signing of the treaty was also a prerequisite for the US Department of Transportation to approve a JBA between LATAM and American Airlines. The partnership was already approved by the Brazilian authorities in October this year. The approval covers both passenger and cargo operations and follows similar nods given to the tie-up in Uruguay and Colombia. Other Southern American countries where LATAM Airlines Group owns subsidiaries, including Chile, have so far not given the tie-up their respective greenlights.

The open skies agreement was also supported by GOL Linhas Aéreas Inteligentes (G3, Sao Paulo Congonhas) in which Delta Air Lines (DL, Atlanta Hartsfield Jackson) holds a 9.5% share, as well as by Avianca Brasil (O6, Sao Paulo Congonhas) which is expected to enter into a partnership with a fellow Star Alliance member United Airlines (UA, Chicago O'Hare).

The newswire added that the Brazilian government is simultaneously mulling the relaxation of a foreign investment clause which currently allows foreign entities to hold a maximum of 20% of a Brazilian airline's shares.