The U.S. Department of Transportation (DOT) issued today a Show Cause Order tentatively granting approval of, and antitrust immunity for, the proposed alliance agreements submitted by Delta Air Lines and Aeromexico.
Delta and Aeromexico are proposing to use the antitrust immunity to operate a joint venture between the U.S. and Mexico.
If the application is granted final approval in a subsequent order, the carriers would coordinate their network planning, pricing, and sales activities, as well as enhance the alignment of their respective frequent flyer programs.
The Department’s Show Cause Order examines competitive conditions in a number of U.S.-Mexico markets, including markets to/from Mexico City (MEX) and New York-JFK.
As part of the tentative decision, the Department is proposing, as a condition of approval, that the carriers divest enough takeoff and landing authorizations (slots) to support 24 new daily transborder services from MEX and six new daily transborder services from JFK.
The Department tentatively finds these conditions are necessary to prevent harm to consumers resulting from the carriers’ dominant positions at MEX and JFK, and the inability of new entrant carriers to access slots at the airports. The Department is also proposing other conditions on its approval, including limiting the grant of immunity to five years.