Delta & Aeromexico Pressured To Scale Again Partnership

Delta and Aeromexico each belong to SkyTeam, and Delta additionally owns a stake in Aeromexico. Not solely that, however the two airways have antitrust immunity for transborder flights between the US and Mexico. Sadly for the airways, that gained’t be the case for lengthy — this will likely be ending in late 2024, as US regulators are refusing to resume the settlement…

Delta & Aeromexico shedding antitrust immunity

The US Division of Transportation (DOT) has revealed that it doesn’t intend to resume the antitrust immunity that Delta and Aeromexico have had since 2016, which permits the 2 airways to coordinate schedules and fares on transborder flights.

To be clear, the airways can nonetheless associate — there’s nothing stopping the airways from providing reciprocal perks for loyalty program members, for instance — however they only can’t act as one entity between the US and Mexico by way of pricing and scheduling. Delta and Aeromexico have till the tip of the IATA summer season 2024 schedule to wind down their partnership, so that provides them till October 26, 2024.

Why is the DOT immediately blocking this shut partnership? The DOT is blaming this on actions taken by the federal government of Mexico in relation to Mexico Metropolis Benito Juárez Worldwide Airport (MEX), which is Mexico’s largest and most necessary airport.

Aeromexico & Delta are shedding antitrust immunity

How Mexico Metropolis Airport is on the middle of this drama

The DOT has claimed that Mexico’s strategy of awarding slots at Mexico Metropolis Airport has lengthy been opaque and anticompetitive, and that Aeromexico (as the biggest airline there), was the first beneficiary. The DOT claims that on account of anticompetitive guidelines and inadequate enforcement, Aeromexico has been capable of underutilize its slot portfolio, which concurrently conserving slots out of the arms of rivals.

Whereas the federal government of Mexico dedicated to adopting regulatory adjustments to enhance the predictability and transparency of its slot allocation course of, that hasn’t occurred.

It will get even worse than that, although. Extra just lately, the federal government of Mexico has banned all cargo operations from Mexico Metropolis Airport, and has additionally lowered capability on the airport during the last three IATA visitors seasons, to the detriment of each present air carriers and potential new entrants.

The federal government has justified these flight reductions by claiming that they’re wanted for the airport to bear a major renovation. Nonetheless, the federal government has additionally conceded that no such building plans exist, but it nonetheless gained’t permit further capability on the airport, that means current airways can’t add service, and new entrants can’t enter the market.

It positive appears to me like the first motive of the federal government of Mexico is to proceed pushing operations to the much less fascinating Mexico Metropolis Felipe Angeles Worldwide Airport (NLU). However that airport hasn’t been gaining traction in the identical means the federal government has hoped, which is why it’s additionally necessary that rivals preserve entry to the town’s foremost airport.

Aeromexico has an excessive amount of energy at Mexico Metropolis Airport

Backside line

US regulators have knowledgeable Delta and Aeromexico that their antitrust immunity gained’t be renewed as of October 2024. That is due to Mexico’s baseless restrictions at Mexico Metropolis Airport, which disproportionately assist Aeromexico, whereas hurting different airways.

Finally these sorts of shut partnerships between airways have to be renewed on an ongoing foundation, and regulators can contemplate in the event that they’re nonetheless good for customers. I believe the DOT is correct right here, by way of the association between the 2 carriers not essentially being good for customers anymore.

As I mentioned above, this doesn’t imply that Delta and Aeromexico have to finish their partnership. Slightly, they only can’t coordinate schedules and fares, and should act as rivals available in the market.

What do you make of Delta and Aeromexico shedding antitrust immunity?

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