Feds pave the way for Delta-Aeromexico joint venture

Feds pave the way for Delta-Aeromexico joint venture
© Greg Nash

The Department of Transportation (DOT) has paved the way for a proposed alliance between Delta Air Lines and Aeromexico.

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The DOT announced Friday that it was tentatively granting antitrust immunity to the two airlines so they could operate a joint venture between the U.S. and Mexico.

As a condition of the approval, the DOT is proposing that the carriers give up enough takeoff and landing slots to support 24 new daily transborder services from Mexico City International Airport and six new daily transborder services from John F. Kennedy International Airport.

“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 agency said.

Delta and Mexico's flagship carrier have been seeking anti-trust protection so that the companies could coordinate flights and fare prices, with Delta Air Lines announcing it intends to buy up to 49 percent of Aeromexico.

The U.S. and Mexico solidified an air transportation deal this summer that modifies a 1960 agreement to open up new routes between the two countries, as well as permit an unlimited number of flights.

The deal, which is expected to increase competition and expand the world's second-largest cross-border market, was also thought to have cleared some of the major hurdles to the proposed Delta-Aeromexico alliance.

Some critics argue that the joint venture is anti-competitive and worry that DOT approval would make it more difficult to obtain slots at Mexico City’s airport.

Aeromexico is Mexico's national carrier and only traditional airline. Mexicana de Aviación, the country's oldest airline, ceased operations in 2010 due to bankruptcy.

Aeromexico was government owned until 2007, when a consortium led by Mexico's Citigroup affiliate took control of 90 percent of the company's stock. Delta bought just over 4 percent of the company in 2012 for $65 million.

The DOT emphasized that the tentative approval is only the first step and said it will review public comments before preparing a final decision.

Rafael Bernal contributed to this report