Summary
- American Airlines has argued that the DOT was right in tentatively ending the Aeromexico and Delta Air Lines joint venture.
- The carrier added that ever since the two airlines applied for antitrust immunity, the slot conditions at MEX has worsened.
- Meanwhile, Delta Air Lines has requested an extension to respond to the DOT’s concerns.
American Airlines has sided with the United States Department of Transportation (DOT), which issued its show cause order (SCO) dismissing the application for extension of antitrust immunity (ATI) for the Aeromexico and Delta Air Lines agreement.
Non-functioning open skies agreement between US and Mexico
American Airlines noted that in its SCO, the DOT detailed how the current actions by the Mexican government, which have included the ban of all-cargo flights at Mexico City Aeropuerto Internacional Benito Juárez (MEX) and reduced capacity at the same airport, are not compliant with the Open Skies agreement between the US and Mexico.
Photo: Vincenzo Pace I Simple Flying
As a result, American Airlines highlighted that the DOT followed its long-standing precedent of dismissing without prejudice the application for extension of the Aeromexico and Delta Air Lines joint venture’s ATI. The DOT issued its SCO on January 26, while American Airlines provided its comments on February 23.
“The Department’s decision is neither premature nor punitive. The Joint Applicants [Aeromexico and Delta Air Lines – ed. note] have benefitted from ATI for more than seven years despite the Department’s consistent concerns regarding the Mexican government’s management of MEX.”
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Lack of transparency at MEX
The carrier pointed out that when Aeromexico and Delta Air Lines applied for the ATI for the joint venture in 2015, several airlines had already expressed concerns regarding the lack of transparent slot allocation processes at MEX, which unfairly advantaged Aeromexico. The DOT approved the joint venture in 2016.
Photo: Leonard Zhukovsky | Shutterstock
Furthermore, while the DOT approved the joint venture for five years, it said at the time that if the issues regarding slot allocation continued, it “would have to carefully consider whether it could approve a new application if tendered,” according to the American Airlines filing.
The airline also pointed out that Aeromexico and Delta Air Lines accepted the DOT’s conditions, including the risk that their joint venture would not be renewed after the initial five-year period. As such, both carriers have had a lot of time to establish that circumstances have changed to warrant an extension of the grant of ATI, with the two companies filing to eliminate the five-year expiration period in July 2019.
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Continuous extensions
American Airlines noted that in response to that motion, multiple US-based airlines once again raised concerns about how slots are administered at MEX, with the DOT concluding that it was unable to evaluate the efficacy of changes in the slot management of the airport to resolve those concerns.
As such, the Department extended the deadline to file a new application for the ATI by three months. Eventually, the ATI grant expired on December 21, 2021, yet Aeromexico and Delta Air Lines “have continued to operate with ATI during the pendency of the new application.”
“After more than seven years since the Department raised significant concerns regarding the Mexican government’s management of MEX, and more than two years after the initial grant of ATI was set to expire, the situation has worsened.”
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Another call for an extension
Overall, American Airlines said that it hopes for a quick and effective resolution of the DOT’s concerns with the Mexican government, urging the Department to use every tool at its disposal, including finalizing the tentative decision to not grant ATI to the Aeromexico and Delta Air Lines joint venture.
However, Delta Air Lines has already asked the DOT to grant a four-week extension until March 8. The extension would give Delta Air Lines time to conduct a pool poll of the carrier representatives served with this motion and advise the department of the results. The carrier list includes 17 different US-based airlines.
Photo: Helissa Grundemann | Shutterstock
The airline noted that if the DOT were to finalize its SCO, it would have a “far-reaching impact on the U.S.-Mexico relationship,” with the additional time enabling the DOT to have a more complete overview of the situation and enable Aeromexico and Delta Air Lines to address the issues identified in the SCO fully.
Finally, the carrier said that the application to renew the ATI grant has been pending since March 2022, and giving it four additional weeks would be “fair and warranted.” The DOT has also suspended the review of another joint venture, namely the Allegiant Air and Viva Aerobus partnership.
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