The days could be numbered for the joint venture between Delta Air Lines and Aeromexico.
The U.S. Department of Transportation on Friday “tentatively dismissed without prejudice” the application from Delta and Aeromexico to renew DOT’s approval and grant of antitrust immunity that allows the two carriers to operate their agreement, DOT confirmed.
Delta and Aeromexico first applied for a transborder joint venture in 2015. DOT in 2016 approved the antitrust immunity required to form the joint venture, but required some slot divestitures in Mexico City and New York’s John F. Kennedy International Airport. The carriers eventually agreed and launched several new routes between the U.S. and Mexico while setting prices jointly.
As recently as October, Delta and Aeromexico announced a planned expansion of their codeshare program.
DOT in an order issued Jan. 26 noted that actions taken by the government of Mexico “have in effect removed the necessary precondition for the consideration of an ATI application or continuation of an existing immunized joint venture.” The order says the existing immunity from 2016 has expired but remains in effect pending a final decision of the renewal application.
The Mexican government recently moved all cargo operations from Benito Juarez International Airport to airports outside of Mexico City, according to the DOT order. In addition, capacity at the airport has been reduced over each of the last three International Air Transport Association seasons. The government took these actions to undertake renovations at the airport, however “the Mexican government has more recently conceded that no such construction plans exist,” and in a Nov. 28 communication to DOT, indicated there would be no additional capacity at the airport under current conditions.
“As such, there is no valid operational basis on which to undertake the already-enacted capacity reductions and no possibility of new entry at MEX for the foreseeable future,” according to the agency.
DOT also “proposes” that the carriers’ existing immunity would cease at the end of the IATA season following the issuance of a final order, which would be Oct. 26, 2024. That should provide enough time to “unwind” the joint venture and modify agreements “to be consistent with an arms-length non-immunized alliance,” according to DOT.
“Delta is deeply disappointed by the U.S. Department of Transportation’s tentative decision to terminate its approval of Delta and Aeromexico’s procompetitive joint cooperation agreement,” the U.S. carrier wrote in a Monday statement. “This unprecedented overreach by the DOT will cause significant harm to consumers traveling between the U.S. and Mexico. Mexico is our country’s second-largest trading partner, and the Delta/Aeromexico joint cooperation agreement, which is responsible for the launch of 15 routes between the U.S. and Mexico, has been critical to connecting communities and businesses in both countries, while generating substantial economic benefits for U.S. businesses. Delta will take all necessary steps to protect the millions of consumers that have benefitted from its strategic partnership to ensure the continued delivery of important benefits to consumers in the U.S.-Mexico market.”
Aeromexico did not immediately responded to a request for comment.
