US airlines are tussling with the US Department of Transportation (DOT) over their ability to establish joint businesses with Mexican airlines, moves coming after the DOT in July withdrew approval of Delta Air Lines’ partnership with Aeromexico.
In recent days, Delta and Aeromexico have urged the DOT to reconsider that decision, while two other airlines – US discounter Allegiant Air and Mexican low-cost operator Viva Aerobus – appealed to the DOT to approve their longstanding application for a joint business.
The status of the partnerships are caught up in a broader political tussle between the US and Mexican governments.
In July, the DOT slapped new operating restrictions on Mexican airlines flying to the USA, including with requirements that the airlines file with the agency lists of their US flights. The DOT also withdrew its antitrust immunity approval of Delta’s joint business with Aeromexico, meaning the carriers must wind down that longstanding deal.
The moves were a response by the DOT to its assertion that since 2022 the Mexican government has failed to comply with the US-Mexico air transport agreement, including by restricting US airlines’ operations at Mexico City’s prime airport, Benito Juarez International. The Mexican government rescinded some operating slots at Benito Juarez that had been held by US and Mexican airlines, and required some carriers operate at the new Felipe Angeles International airport, which is farther from Mexico City.
Now the carriers are pushing back.
In a filing this month with the DOT, Delta and Aeromexico insisted their partnership is pro-consumer, saying it provides “convenient service and lower fares” and that the DOT’s action harms the airlines and consumers, not the Mexican government.
“If Delta and Aeromexico are forced to unravel their joint venture… up to two dozen routes between the United States and Mexico could be cancelled, with smaller aircraft replacing large narrowbody aircraft on many other routes,” they say.
The issue has split the US airline industry, with American Airlines siding with the DOT.
The agency’s actions, “including the proposal to withdraw antitrust immunity to the Delta-Aeromexico [joint venture]… properly seek to ensure that international aviation markets are fair and pro-competitive for US airlines and US consumers”, says American in an 11 August DOT filing.
Meanwhile, Allegiant and Viva Aerobus are walking a fine line as they seek DOT approval for their own proposed joint business.
Those airlines pitched an alliance in December 2021, kicking off a lengthy DOT review that the agency paused in 2023 when competitive concerns at Mexico City cropped up.
In a 20 August filing with the DOT, Allegiant and Viva Aerobus urged the agency to restart that review, saying the Mexican government’s actions impose no competitive concerns related to their proposal.
Allegiant and Viva insist the Mexican air travel market lacks competition from low-cost airlines and that by working together they can offer lower fares.
“The Allegiant/Viva alliance promises to bring significant benefits to American consumers, yet it has been pending before the Department for nearly four years…. Approval will enable the delivery of immediate, tangible benefits to underserved city pairs, leisure travellers and price-sensitive consumers,” the airlines say.
