Delta Air Lines is proceeding on a joint venture with Mexico’s largest airline, Aeromexico, accepting the federal government’s antitrust conditions placed on the alliance.
The Atlanta-based airline, initially reluctant to accept the limitations placed on it by the U.S. Department of Transportation, believes the benefits outweigh the restrictions and announced its intention Wednesday of moving ahead in forming the transborder partnership.
Earlier this month, the DOT granted antitrust immunity for the $1.5 billion alliance with several conditions. The most critical requires the carriers give up dozens of gate slots at Aeromexico’s hub, Mexico City Benito Juarez International Airport, to prevent airfare prices from rising dramatically in the face of reduced competition between airlines.
Delta will also give up four slot-pairs at New York’s John F. Kennedy International Airport and the antitrust immunity will initially last just five years. Delta already operates joint ventures with other airlines, including Dutch carrier KLM, which many Minneapolis-St. Paul travelers use for flights to Europe.
The Delta-Aeromexico deal is the largest alliance between a Mexican and U.S. carrier. Through this partnership, Delta gains a strong presence not only in Mexico City, but also Monterrey and Guadalajara, while Aeromexico benefits from Delta’s robust presence in Atlanta, Detroit, Los Angeles, Minneapolis-St. Paul, New York, Salt Lake City and Seattle.
For more than 20 years, the two airlines have held a code-share agreement, which allows one airline to market the other airlines’s flights to make a complete passenger itinerary. Then, in 2012, Delta bought a $65-million stake in Aeromexico and is now in the process of buying up 49 percent of the Mexican airline.