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Mexico-US transborder airline market Part 2: Controversy surrounds the proposed Aeromexico-Delta JV

Delta Air Lines believes that it will receive approval for its proposed immunised joint venture with Aeromexico in 4Q2016. But opponents of the tie-up – most notably Hawaiian Airlines and jetBlue – are ratcheting up their arguments that without a formal open skies agreement between Mexico and the US antitrust immunity is a non-starter.

jetBlue and the Mexican airlines Interjet and Volaris have also spoken out about the disproportionate number of slots that Aeromexico and Delta will hold at Mexico’s largest airport and gateway – Mexico City Juarez. jetBlue is urging regulators evaluating Aeromexico and Delta’s ATI request to require the divestment of 30 slot pairs at Juarez in order to ensure smaller airlines can compete effectively against the larger airlines dominating the Mexican transborder market.

Given the political uncertainty in the US, it is tough to predict whether the DoT will issue a decision on the joint venture before the Nov-2016 presidential elections. Whatever the outcome Delta will still exert considerable influence over Aeromexico, given its plans to up its stake in Mexico’s largest airline. ATI seems to be a cornerstone of Aeromexico’s transborder strategy, and without the benefits of joint venture Delta will assume the role of a vocal shareholder, rather than a full strategic partner.

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