DoJ backs ending Delta, Aeromexico venture

The Star

21 hours ago

Open race: An Aeromexico aircraft at Benito Juarez International Airport in Mexico City. Washington is threatening to revoke antitrust immunity for Delta Air and Aeromexico, and demands Mexico address anti-competitive behaviour. — Bloomberg
NEW YORK: Delta Air Lines Inc and Grupo Aeromexico should lose antitrust protection that allows the carriers to plan and price flights jointly, the US Justice Department (DoJ) says in a filing.
The agency cited evidence it said suggested that restrictive and possibly discriminatory policies by the government of Mexico have limited competition.
The federal agency supported a tentative recommendation from the US Transportation Department (DoT) that President Donald Trump's administration should revoke antitrust protection for the long-standing alliance, according to the comments dated Aug 8 and filed on Monday.
The DoT warning was made last month under a new set of orders demanding Mexico act to address anti-competitive behaviour.
Practices by Mexico's government 'have limited entry and expansion by certain carriers' at Benito Juarez International Airport 'and thereby undermined competitive conditions in Mexico, thwarting open market access on routes between Mexico and the United States', the DoJ said.
The alliance 'fosters enhanced competition' with other US and Mexican carriers, Delta and Aeromexico said in a filing on Monday. The venture holds 20% of the US-Mexico market measured by seat share.
American Airlines Group Inc has 21%, United Airlines Holdings Inc 16% and Volaris 16%.
It is also an economic boon, they said, generating 4,000 US jobs, more than US$310mil of economic benefit and more than US$200mil in annual tourism spending in the United States.
Ending the venture's antitrust immunity 'would punish a US company and US consumers, not the government of Mexico', the two airlines said.
'Other, superior measures are available to remedy the situation with the government of Mexico without harming the US economy, the Department should pursue those alternatives instead.'
The initial approval of antitrust immunity for the airlines was conditioned on the creation of a 'liberalised' bilateral air service agreement between the United States and Mexico which would have fostered open competition on routes between the two countries, the DoJ said.
The airline alliance no longer 'serves the public interest' the United States said on July 19.
The DoT alleges that Mexico has been acting outside of a 2015 agreement since 2022, taking slots away from US carriers at Mexico City's Benito Juarez airport and restricting air cargo flights there.
The move was part of Mexican efforts to drive cargo traffic to the newly built airport outside Mexico City.
Mexican airlines will now be required to file schedules with US authorities and seek approval for large charter flights, under an order issued by Transportation Secretary Sean Duffy last month.
Delta and Aeromexico could still maintain their partnership through arms-length activities, he said at the time.
The United States is also looking into agreements between US and European carriers, he said.
Mexico's infrastructure, communications and transport ministry didn't immediately respond to a request for comment.
Atlanta, Georgia-based Delta warned last month that an end to the partnership 'would cause significant harm to consumers travelling between the United States and Mexico, as well as US jobs, communities and transborder competition.' — Bloomberg