Reluctantly, and in the interest of the greater good of its joint venture, Delta Air Lines and Aeromexico have agreed to the demands of the Department of Transportation in order to extend its partnership.
The deal? Delta and Aeromexico have formed a cooperation agreement and have received anti-trust immunity from the DOT - with Delta openly saying it would like to increase its ownership in the Mexican airline from five percent to 40 percent - in exchange for giving up a combined 28 gates to other airlines for competitive balance in the market.
That includes 24 slot-pairs at Mexico City's Benito Juarez International Airport and four slot-pairs at New York City's John F. Kennedy International Airport.
In its final order, the DOT said it believes the cooperative agreement between the two airlines to increase the network between the two countries and reduce travel time will benefit the public, but "in order to ensure adequate competition in the covered market, thereby making the approval of the alliance pro-consumer, our grant of antitrust immunity (ATI) is subject to a number of conditions," including the divestiture of the gates at the two airports.
While Delta and Aeromexico put on a happy face in a public statement, it sent a joint letter to the DOT expressing disappointment at having to cede gate space.
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"In markets with robust competition, the public interest is not served by the government favoring a particular type of competitor, imposing a redistribution of assets, and deciding who should compete where," the letter stated, in part.
Still, the two carriers were pleased, calling it a historic agreement that will establish the largest transborder alliance between Mexico and the United States, expand competition and benefit customers of both airlines.
"Together, Delta and Aeromexico are stronger in the U.S.-Mexico market than either airline can be on its own," Delta CEO Ed Bastian said in a statement. "The partnership will make it possible for us to offer customers more flights to more destinations, with more choices every time someone travels across the border. We will offer industry-leading reliability, great service and an unmatched array of options."
"This agreement will mark the beginning of a new era in the aviation of North America, as the first and the largest cross-border alliance between Mexico and the United States," said Aeromexico CEO Andres Conesa. "It is the next step in our relationship, and our networks will provide more benefits to our customers while increasing the options for connectivity, products and services."
The agreement will allow Aeromexico and Delta to coordinate efforts to enhance the travel experience with expanded destinations and frequencies, improved connecting schedules, even improvement in gates and lounges.
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