US Government Orders Delta Air Lines and Aeromexico to End Joint Venture

US Government Mandates End to Major Airline Partnership

The United States government has issued a final directive ordering Delta Air Lines and Aeromexico to dissolve their joint venture. This partnership, which has been in place for several years, allowed the two airlines to closely coordinate their flight schedules, share revenue, and offer a more integrated travel experience for passengers flying between the U.S. and Mexico.

The decision comes from the U.S. Department of Transportation (DOT) and represents a significant shift in the operational landscape for both carriers. The order specifies a deadline for the airlines to unwind their comprehensive agreement, reverting to a more traditional, less integrated form of cooperation.

Reasons Behind the Government's Decision

The primary reason cited by the U.S. government for this action revolves around recent changes in Mexico's aviation policies. The U.S. Department of Transportation expressed concerns that these policy adjustments have created an unfair operating environment for U.S. air carriers, potentially violating the bilateral aviation agreement between the two countries. Specifically, issues such as the reduction of capacity at Mexico City International Airport (AICM) and the relocation of cargo operations to a newer, less developed airport (Felipe Ángeles International Airport, AIFA) were highlighted.

These actions by the Mexican government were perceived as measures that could hinder competition and disadvantage U.S. airlines. The joint venture between Delta and Aeromexico had initially received antitrust immunity, allowing them to collaborate closely without violating competition laws. However, such immunity is typically granted under the condition that market dynamics remain fair and competitive.

Impact on Airlines and Travelers

For Delta Air Lines and Aeromexico, the termination of their joint venture means they will no longer be able to pool resources, synchronize flight planning, or share profits on routes between the U.S. and Mexico. This could necessitate a restructuring of their routes and potentially lead to more competitive pricing on certain corridors as they operate more independently.

Travelers may experience some changes as a result of this order. While both airlines will continue to operate flights between the two countries, the seamless integration of services, such as shared loyalty benefits, coordinated connections, and baggage handling across both networks, might be affected. There could also be adjustments to flight frequencies or route offerings as the airlines adapt to their individual strategies.

What happens next

Delta and Aeromexico are now required to comply with the U.S. government's order and dismantle their joint venture by the specified deadline. While they can still maintain a basic codeshare relationship, the deep level of commercial integration they once enjoyed will cease. Both airlines will likely need to re-evaluate their strategies for the U.S.-Mexico market, focusing on individual competitive advantages and potentially exploring new, less restrictive forms of partnership.