Delta and Aeromexico both belong to SkyTeam, and Delta also owns a stake in Aeromexico. Not only that, but the two airlines have antitrust immunity for transborder flights between the United States and Mexico. Unfortunately for the airlines, that won’t be the case for long — this will be ending in late 2024, as US regulators are refusing to renew the agreement…
Delta & Aeromexico losing antitrust immunity
The United States Department of Transportation (DOT) has revealed that it doesn’t intend to renew the antitrust immunity that Delta and Aeromexico have had since 2016, which allows the two airlines to coordinate schedules and fares on transborder flights.
To be clear, the airlines can still partner — there’s nothing preventing the airlines from offering reciprocal perks for loyalty program members, for example — but they just can’t act as one entity between the United States and Mexico in terms of pricing and scheduling. Delta and Aeromexico have until the end of the IATA summer 2024 schedule to wind down their partnership, so that gives them until October 26, 2024.
Why is the DOT suddenly blocking this close partnership? The DOT is blaming this on actions taken by the government of Mexico in relation to Mexico City Benito Juárez International Airport (MEX), which is Mexico’s largest and most important airport.
How Mexico City Airport is at the center of this drama
The DOT has claimed that Mexico’s process of awarding slots at Mexico City Airport has long been opaque and anticompetitive, and that Aeromexico (as the largest airline there), was the primary beneficiary. The DOT claims that due to anticompetitive rules and insufficient enforcement, Aeromexico has been able to underutilize its slot portfolio, which simultaneously keeping slots out of the hands of competitors.
While the government of Mexico committed to adopting regulatory changes to improve the predictability and transparency of its slot allocation process, that hasn’t happened.
It gets even worse than that, though. More recently, the government of Mexico has banned all cargo operations from Mexico City Airport, and has also reduced capacity at the airport over the last three IATA traffic seasons, to the detriment of both current air carriers and potential new entrants.
The government has justified these flight reductions by claiming that they’re needed for the airport to undergo a significant renovation. However, the government has also conceded that no such construction plans exist, yet it still won’t allow additional capacity at the airport, meaning existing airlines can’t add service, and new entrants can’t enter the market.
It sure seems to me like the primary motive of the government of Mexico is to continue pushing operations to the less desirable Mexico City Felipe Angeles International Airport (NLU). But that airport hasn’t been gaining traction in the same way the government has hoped, which is why it’s also important that competitors maintain access to the city’s main airport.
Bottom line
US regulators have informed Delta and Aeromexico that their antitrust immunity won’t be renewed as of October 2024. This is because of Mexico’s baseless restrictions at Mexico City Airport, which disproportionately help Aeromexico, while hurting other airlines.
Ultimately these kinds of close partnerships between airlines need to be renewed on an ongoing basis, and regulators can consider if they’re still good for consumers. I think the DOT is right here, in terms of the arrangement between the two carriers not necessarily being good for consumers anymore.
As I said above, this doesn’t mean that Delta and Aeromexico have to end their partnership. Rather, they just can’t coordinate schedules and fares, and will have to act as competitors in the market.
What do you make of Delta and Aeromexico losing antitrust immunity?
