DOT Threatens to End Delta-Aeromexico Joint Venture in Mexico Dispute

The U.S. Transportation Department (DOT) is escalating a long-running feud with Mexico over the country’s alleged violations of a 2015 Open Skies agreement with the U.S.

On Saturday, the DOT said it would require Mexican airlines to provide detailed information on operations into the U.S. in order to determine whether or not those flights are violating “applicable law” or are adversely affecting “the public interest.” The DOT has set a July 29 deadline for a response.

At the same time, the DOT now says that Mexican airlines will need to seek approval “before operating any large passenger or cargo aircraft charter flights to or from the United States.“

“The Department reserves the right to disapprove flight requests from Mexico should the country fail to take corrective action,” the DOT said in the filing.

The dispute comes down to capacity restrictions that the Mexican government placed at Mexico City Benito Juárez International Airport (MEX) starting in 2022. Those restrictions effectively forced some foreign airlines (the DOT cites American, Delta, and United in the filing) to use Felipe Angeles Airport (NLU) when flying into Mexico City, an airport located a little less than 30 miles north of city limits.

Then, a year later, Mexico forced U.S. cargo carriers out of Benito Juárez and into Felipe Angeles.

The expectation was that slot restrictions at Benito Juárez would be rolled back, but three years later, despite pressure from the U.S., that hasn’t been the case.

“By restricting slots and mandating that all-cargo operations move out of MEX, Mexico has broken its promise, disrupted the market, and left American businesses holding the bag for millions in increased costs,” the DOT said in its filing.

DOT Secretary Duffy said this weekend that that move violated the 2015 Open Skies Agreement and gave an unfair advantage to Mexican airlines. The previous DOT administration had also raised concerns.

Delta Air Line’s Aeromexico Joint Venture in Jeopardy

Perhaps the biggest news for American carriers is that the DOT is threatening to end the antitrust immunity that Delta Air Lines and Aeromexico have for their joint venture, a move that could effectively end the partnership between the two airlines. The move escalates a January 2024 DOT “show cause” order that first put scrutiny on the partnership.

In the filing, the DOT said that the move would be “corrective action to address competitive issues in the market.”

If the DOT finalizes the move, “Delta/Aeromexico would be required to discontinue cooperation such as common pricing, capacity management, and revenue sharing that require antitrust immunity,” it said.

The two carriers could still “continue their partnership through arms-length activities such as codesharing, marketing, and frequent flyer cooperation. Delta will also be able to retain its equity stake in Aeromexico and maintain all of its existing flying in the U.S.-Mexico market unimpeded.”

Both Delta and Aeromexico have long said that forcing the end of the partnership would unfairly punish them for the actions of the Mexican government. Delta, in a statement this weekend, also said that an end to the partnership would “cause significant harm to consumers traveling between the U.S. and Mexico, as well as U.S. jobs, communities, and transborder competition.”