Transportation Department of the United States intends to dismantle Delta Air Lines' business partnership with Aeromexico
The U.S. Department of Transportation (DOT) has proposed to withdraw the antitrust immunity (ATI) for the joint venture between Delta Air Lines and Aeromexico, putting the partnership under significant threat. The DOT's decision comes after an investigation into competitive fairness concerns, particularly regarding Mexico's government practices around slot management at Mexico City's Benito Juarez International Airport (MEX) and the forced relocation of cargo operations.
If the revocation of ATI is finalized, the joint venture’s existing operations requiring ATI would have to end by at least October 25, 2025. This would force Delta and Aeromexico to unwind their integrated cooperation on pricing, capacity management, and revenue sharing. However, the two carriers would still be allowed to maintain a partnership through less integrated, arms-length arrangements such as codesharing, marketing collaborations, and frequent flyer cooperation. Delta will also retain its equity stake in Aeromexico and maintain its existing U.S.-Mexico flights unaffected.
The DOT's action is part of a broader initiative to pressure Mexico into changing its policy. The U.S. government has also put European countries on notice for potential similar measures. Delta and Aeromexico argue that ending the partnership unfairly punishes them for the Mexican government’s actions and would harm consumers, U.S. jobs, and transborder competition. However, the DOT has maintained a firm stance, emphasizing the worsening market conditions and the need to protect consumers by ensuring fair competition.
The DOT has issued a second order prohibiting Mexican airlines from operating large aircraft for passenger or cargo charter flights to or from the United States without prior DOT approval. Mexican airlines are required to file schedules with the department for all their U.S. operations by July 29. The Department reserves the right to disapprove flight requests from Mexico should the country fail to take corrective action.
The forced relocation of all-cargo carriers to Felipe Angeles International Airport added operational costs and complexity for cargo operators, disrupting the market and costing American companies millions of dollars. The slot restrictions and mandate that all-cargo operations move out of MEX have been a source of contention between the two countries.
In a separate development, a declassified U.S. government document links Manuel Bartlett, a former Mexican cabinet member, to the murder of DEA agent Enrique "Kiki" Camarena. This unrelated incident has not affected the ongoing DOT investigation and the potential termination of the Delta-Aeromexico joint venture.
This situation remains under regulatory process, with a final decision expected before the joint venture must unwind integrated cooperation later this year. The DOT's decision could have far-reaching implications for the aviation industry and bilateral relations between the U.S. and Mexico.
[1] U.S. Department of Transportation, Press Release, [Date] [2] Aviation Week, "U.S. DOT Threatens to Dissolve Delta-Aeromexico Joint Venture", [Date] [3] Reuters, "U.S. to revoke Delta-Aeromexico joint venture antitrust immunity", [Date] [4] The Wall Street Journal, "U.S. Proposes to Revoke Delta-Aeromexico Joint Venture Antitrust Immunity", [Date] [5] Bloomberg, "U.S. to Revoke Delta-Aeromexico Joint Venture Antitrust Immunity", [Date]
The DOT's decision to revoke the antitrust immunity for Delta Air Lines and Aeromexico's joint venture could affect the financial aspects of their integrated cooperation on pricing, capacity management, and revenue sharing. This move could also impact the broader aviation industry, particularly transportation, given that the termination would force the carriers to adopt less integrated, arms-length arrangements.
The US government's action towards the Delta-Aeromexico joint venture is part of a wider initiative to address concerns related to competitive fairness in the finance sector, specifically Mexico's government practices around slot management in transportation infrastructure such as airports.
