Delta Air Lines and Aeromexico on Friday filed an objection with the U.S. Department of Transportation against DOT's January decision to "tentatively dismiss" the carrier's antitrust immunity grant renewal, which has allowed the airlines to operate a joint venture.
The carriers said that the decision if finalized would punish the partners "and the communities they serve, erode competition in the transborder U.S.-Mexico market, harm U.S.-Mexico consumers and slow economic growth with the largest trading partner of the United States—all with no countervailing benefit to U.S. aviation interests or likely impact on the action of the government of Mexico."
Delta and Aeromexico since 2015 have operated an antitrust-immune crossborder joint venture, allowing them to jointly set prices on routes between the U.S. and Mexico. DOT last month indicated it planned not to review later this year the grant of antitrust immunity, in part because the agency alleged the Mexican government recently moved all cargo operations from Benito Juarez International Airport to airports outside of Mexico City, and passenger capacity at the airport has been reduced during the past three International Air Transport Association traffic seasons.
Delta and Aeromexico argued that they had no "responsibility or control" over the government's decision to move cargo operations and reduce capacity at the airport. Those decisions were "to the detriment of both current air carriers and potential new entrants," according to the filing.
The carriers also noted that should they "unravel" their agreement, nearly two dozen routes between the U.S. and Mexico would be at risk of cancellation, and capacity would be reduced. Without network benefits, they argued, fares on their partner routes would "certainly increase," jobs on both sides of the border would be lost, the number of tourists between the countries would fall and competition in the market would erode.
After DOT's Jan. 26 order to show cause, Delta and Aeromexico on Jan. 29 filed a request for additional time for objections and comments. On Feb. 7, the agency issued an order extending the comment period by two weeks, to March 5.
DOT also charged that despite issuing repeated warnings to its Mexican counterparts, the government of Mexico is not adhering to the 2015 U.S.-Mexico Air Transport Agreement, and as a result suspended its review of an application for antitrust immunity by Allegiant Air and Viva Aerobus on July 31, 2023, and will dismiss the Delta-Aeromexico application to renew the grant of ATI. Should the agency issue a final order, Delta and Aeromexico tentatively have until Oct. 26 to unwind their relationship.
On Feb. 9, Delta filed a request urging DOT to engage in continued consultations with the government of Mexico, to begin arbitration with the government under the U.S.-Mexico Air Transport Agreement, and "to impose schedule filing requirements on all Mexican carriers serving the United States and, if necessary, restrictions on their schedules."
Proceeding on DOT's current course "would harm consumers and competition, fail to change the [government of Mexico's] behavior and culminate in an order that suffers from numerous [Administrative Procedure Act] violations," Delta and Aeromexico argued in Friday's filing.
American Airlines, however, on Feb. 23 filed a comment in favor of the agency's decision regarding Delta and Aeromexico, stating that the Open Skies agreement between the U.S. and Mexico is a prerequisite for granting antitrust immunity, and charged "the Mexican government's continued noncompliance" with that agreement "effectively means that there has not been a functioning open skies agreement between the United States and Mexico, and therefore the department's main prerequisite for a grant of ATI is absent."
American in its filing also noted that in 2015, "several airlines raised concerns regarding the lack of a fully functioning open skies agreement between the two countries and the lack of transparency in slot allocation at Benito Juarez International Airport "that unfairly advantaged Aeromexico," adding that since that time, "the situation has worsened."
DOT declined further comment.
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