Travelore News: DOT Orders Termination Of Delta, Aeromexico Partnership

Delta Air Lines and Aeromexico will not be permitted to renew their cross-border joint operations. The US Department of Transportation handed down a tentative ruling late Friday, dismissing the renewal application for grant of antitrust immunity (ATI) for their Joint Cooperation Agreement (JCA) and related alliance agreements. Lacking a successful appeal, the partnership will end on 26 October 2024, allowing time for a controlled unwinding of the integrations and other agreements, without adverse impact to consumers.

The Department is levying blame for the decision squarely on the Mexican government and its actions surrounding access to Mexico City’s Benito Juarez International Airport (MEX):

Actions taken by the Mexican government regarding operations at MEX have been raised by the U.S. Government with counterparts at the highest levels within the Government of Mexico in formal consultations as being fundamentally out of compliance with the existing bilateral air service agreement and international norms governing capacity management at airports. After continued consultations that have not altered the current course, the Department tentatively concludes that the condition precedent necessary for consideration and continuation of ATI, namely the adherence by the Government of Mexico to its obligations under the U.S.-Mexico Aviation Agreement, is no longer present.

"Specifically, the DOT calls out the removal of cargo operations at MEX, and reduction of capacity for passenger service at the airport. “The Mexican Government has premised these actions on the need to undertake significant renovation of MEX because of saturation levels at the airport; however, the Mexican Government has more recently conceded that no such construction plans exist but indicated, in a communication to the Department on November 28, that no additional capacity would be added at MEX as long as operational and technical conditions at the airport prevail. 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.”

Allegiant/Viva Aerobus also impacted

This ruling is in line with the July 2023 move by the department to suspend consideration of the joint venture application of Allegiant and Viva Aerobus. That application also called out the MEX access changes as a key sticking point. The Department notes, “Despite further formal engagement with the Mexican Government, no progress has been made at this time on resolving core issues…”

Given that the current Mexican government shows no signs of changing its tune on MEX, expect that nothing will get better for US airlines or transborder partnerships anytime soon. And with the Mexican government trying to launch its own airline, it is equally unlikely that an appeal from Aeromexico for relief at MEX would fall on sympathetic ears.

Source: https://paxex.aero/