Delta Air Lines and its partner carrier Aeromexico on Friday afternoon filed a strongly worded objection to a U.S. Department of Transportation move that threatens their joint venture.
The two airlines said some U.S.-Mexico flights are at risk of being canceled if the DOT moves forward with an earlier, tentative decision to dismiss Delta and Aeromexico’s application to renew antitrust immunity that’s allowed for a close cross-border partnership.
The DOT granted antitrust immunity for the Delta-Aeromexico alliance in 2016, to allow the airlines to coordinate on planning flights, pricing and sales for five years, along with frequent flier program partnerships.
Last October, Delta and Aeromexico announced plans for new routes between the U.S. and Mexico in 2024, including Aeromexico flights from Atlanta to Monterrey, Bajio, Queretaro, Merida and Guadalajara.
But on Jan. 26, the DOT issued an order tentatively dismissing Delta and Aeromexico’s renewal.
The reason for the DOT’s move is not anything Delta did, but because of the DOT’s concerns about the Mexican government’s actions on aviation.
The DOT said a fully liberalized aviation agreement is a “necessary precondition” for the continuation of a joint venture with antitrust immunity. It said “recent actions taken by the Government of Mexico have in effect removed the necessary precondition.” In December, Mexican President Andres Manuel Lopez Obrador launched a state-run airline led by the military.
The DOT in its order voiced “uncertainty of how the market would transform under the new regime” and concerns about a lack of transparency in how flying rights are allocated.
Aeromexico and Delta said in their filing with the DOT that punishing them by terminating the antitrust immunity for their joint venture based on actions of the Mexican government — which they said they have no responsibility or control over — “would be rash, counterproductive, discriminatory, and unprecedented.”
The two airlines said flights on 21 routes between the United States and Mexico “would be at risk of cancellation.” That includes flights on routes planned from Atlanta to Leon/Guanajuato, Merida and Queretaro.
The DOT’s move, they said, would mean higher fares on affected routes, less competition, and declines in jobs and tourism.
The airlines also argued the DOT, as an alternative, could go into arbitration with the Mexican government and impose more requirements or restrictions on Mexican carriers.
Aeromexico and Delta also said in their filing that if the DOT does not withdraw its proposed order, they will challenge the order in court.
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