Trump administration orders Delta, Aeromexico to end joint venture by Jan 1

[WASHINGTON] The Trump administration said late on Monday it was ordering Delta Air Lines and Aeromexico to unwind a joint venture by Jan 1 that let the carriers coordinate scheduling, pricing and capacity decisions for US–Mexico flights.

The US Transportation Department in July had proposed ending the nearly nine-year-old joint venture as part of a number of actions aimed at Mexican aviation after the department under President Joe Biden said in January 2024 it was considering ending it.

Washington has also warned it could take action against European countries over limitations at airports.

The department said on Monday the end of the joint venture “is necessary because of ongoing anticompetitive effects in US-Mexico City markets that provide an unfair advantage to Delta and Aeromexico.”

The carriers account for about 60 per cent of passenger flights from Mexico City Airport to the United States. The airport is the fourth-largest international gateway to and from the United States.

The US government said it was not requiring Delta to sell its 20 per cent equity stake in Aeromexico. It added the carriers had considerable flexibility to compete in the market and to work together and could reapply for approval if conditions change.

Delta said it was disappointed the Transportation Department was terminating approval for the venture, saying it “will cause significant harm to US jobs, communities and consumers traveling between the US and Mexico. We are reviewing the Department’s order and considering next steps.”

The Mexican government and Aeromexico did not immediately respond to requests for comment.

Delta said previously the joint venture generates nearly 4,000 US jobs and more than US$310 million of US gross domestic product. It warned up to US$800 million in annual consumer benefits could evaporate, two dozen routes could be canceled and smaller aircraft could replace existing planes.

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In July, the Transportation Department said it was taking action after the Mexican government had cut flight slots and forced cargo carriers to relocate operations in Mexico City, impacting US airlines.

Transportation Secretary Sean Duffy ordered Mexican carriers to file flight schedules and warned his department could disapprove flight requests from Mexico if the government failed to address US concerns over decisions made in 2022 and 2023.

On Monday, the Transportation Department said Mexico “continues along a path of market intervention and distortion that adversely affects competition in the US-Mexico air services market” and said it “perpetuated a slot allocation regime that does not meet international standards and advantages Aeromexico.”

The department warned likely problems from the venture included higher fares in some markets, reduced capacity and challenges for US carriers due to government intervention. REUTERS