The Strategic Value of LATAM Airlines' Extended Banco Santander Alliance and Its Implications for Loyalty Program-Driven Revenue Growth

In the aftermath of the pandemic, the global travel industry has faced a dual challenge: restoring demand and redefining customer value in an era of heightened competition and shifting consumer expectations. For airlines, the path to sustainable profitability lies not only in operational efficiency but in the creation of ecosystems that bind travelers to their services through loyalty, convenience, and financial incentives. LATAM Airlines Group's recent five-year renewal of its strategic alliance with Banco Santander Chile offers a compelling case study in how long-term airline-bank partnerships can drive customer retention, cross-selling, and revenue resilience.

The Power of Loyalty: A Decades-Long Partnership

The Santander-LATAM alliance, now spanning over three decades, has evolved into a cornerstone of Chile's travel and financial sectors. At its core is the LATAM Pass loyalty program, which has grown to 51 million global members—a 40% increase since 2019—and serves 688,000 Chilean customers alone. This program is not merely a rewards system; it is a behavioral engine that incentivizes frequent engagement. Customers earn miles through Santander's banking products, such as credit cards and merchant transactions, which can then be redeemed for flights, upgrades, and other travel perks.

The scale of this partnership is staggering: approximately 2 million airline tickets are redeemed annually via the program, equivalent to operating 3,415 A320 aircraft exclusively with alliance passengers. For LATAM, this represents a predictable, high-margin revenue stream from Santander's purchase of miles at wholesale rates. For Santander, it provides a differentiated value proposition in a crowded banking market, driving credit card adoption and transaction volume. The symbiosis is clear: the airline gains a stable customer base, while the bank gains a tool for customer retention and cross-selling.

Cross-Selling and Customer Lifetime Value

The alliance's success hinges on its ability to create a feedback loop of value. Santander's customers, incentivized by travel rewards, are more likely to use their credit cards for everyday spending, increasing the bank's interchange income. Conversely, LATAM's loyalty program members, who earn miles through banking activity, become more frequent flyers, boosting the airline's ancillary revenue and seat occupancy. This dynamic is particularly potent in the post-pandemic context, where customer acquisition costs are rising and retention is paramount.

Financial metrics underscore this impact. LATAM's adjusted EBITDAR for the second quarter of 2025 reached $850 million, with full-year guidance revised upward to $3.65–$3.85 billion. The airline's net leverage ratio has improved from 6.2x in 2023 to 1.6x as of mid-2025, reflecting disciplined cost management and the revenue stability provided by the Santander partnership. Meanwhile, Banco Santander Chile, with total assets of $69.4 billion and a BIS capital ratio of 17.0%, has leveraged the alliance to strengthen its customer relationships, with the LATAM Pass program described as the “most established and important loyalty program in Chile.”

Strategic Implications for Investors

For investors, the Santander-LATAM alliance exemplifies how strategic partnerships can mitigate the volatility inherent in the airline industry. By converting Santander's customer base into a recurring revenue stream, LATAM has insulated itself from the cyclical nature of air travel demand. This model is particularly valuable in Latin America, where economic and political instability often disrupts traditional revenue sources.

Moreover, the alliance aligns with broader trends in customer-centric business models. The LATAM Pass program's integration with digital services—such as free Wi-Fi on domestic flights and a shopping platform for mile redemptions—enhances the customer experience while expanding LATAM's ecosystem. These innovations not only drive loyalty but also create barriers to entry for competitors, as switching costs for customers increase.

Risks and Considerations

No partnership is without risk. The Santander-LATAM alliance depends on the financial health of Banco Santander Chile, which, while robust, operates in a competitive banking environment. Additionally, the loyalty program's success relies on maintaining the value of miles—a challenge in an era of inflation and rising travel costs. However, the long-term nature of the partnership (now extended through 2030) and the mutual incentives for both parties to innovate suggest these risks are manageable.

Conclusion: A Blueprint for Sustainable Growth

The extended Santander-LATAM alliance is more than a contractual renewal; it is a strategic reaffirmation of the power of loyalty-driven ecosystems. For LATAM, it ensures a steady flow of revenue and customer retention in a post-pandemic world. For Santander, it reinforces its position as a leader in customer-centric banking. For investors, it highlights the importance of partnerships that create shared value and reduce operational volatility.

In an industry where margins are thin and competition is fierce, the ability to convert customer relationships into recurring revenue is a rare and valuable asset. The Santander-LATAM model offers a blueprint for how airlines—and other industries—can build resilience through long-term, mutually beneficial alliances. As the global economy continues to recover, such partnerships may well define the next era of sustainable profitability.