Background on Aeroméxico-Delta Alliance
Aeroméxico and Delta formed a joint collaboration agreement (JCA) in 2016, which granted them antitrust immunity. This allowed the airlines to coordinate routes and pricing, share revenues, and collaborate on flight operations between Mexico and the United States. The alliance has since transported approximately 54 million passengers and operated around 420,000 flights covering roughly 610 million miles across 77 non-overlapping routes.
US DOT’s Decision and Impact
The US Department of Transportation (DOT) has preliminarily decided to terminate the Aeroméxico-Delta antitrust immunity by October 25, citing changes in market conditions and Mexico’s alleged failure to comply with the existing bilateral air agreement.
This decision will negatively affect VivaAerobus and Allegiant’s similar agreement, set to begin in December 2021. The immunity allows the low-cost airlines to coordinate routes and pricing, share revenues, and collaborate on flights between the two countries.
Following the preliminary decision, interested parties have a maximum of 14 natural days to submit objections, which must be addressed within subsequent business days.
DOT’s Rationale
The DOT argues that the limited growth in available seats between Mexico and the US, compared to competitors in the market, supports their decision.
In 2024, post-Mexico’s return to Category 1 status, the alliance experienced a 15% growth rate—higher than competitors’ 13%—due to flights to Raleigh/Durham, Tampa, and Washington-Dulles in the second half of the year.
Additionally, the US Congress has highlighted elements for DOT to consider when granting antitrust immunity, such as strengthening local airlines’ competitive position to ensure parity with foreign carriers, including profitability in international air transport.
Aeroméxico’s Response
Aeroméxico acknowledged the DOT’s decision and stated they intend to submit a joint response with Delta in upcoming days. The airline emphasized that their partnership with Delta has adopted international best practices in areas like revenue management, network planning, supply chains, and fleet administration.
“Since our JCA took effect in 2017, we have transported approximately 54 million passengers and operated around 420,000 flights covering roughly 610 million miles between Mexico and the United States through 77 non-overlapping routes,” Aeroméxico explained in their 2024 activities report.
Aeroméxico also anticipated the DOT’s decision and clarified that Delta will remain a significant shareholder. They expect their agreements with Delta on code-sharing, loyalty programs, reciprocity, shared premium lounge access, and other synergies—including fuel purchases—to continue.
VivaAerobus and Allegiant’s Prospects
The potential alliance between VivaAerobus and Allegiant remains uncertain following the DOT’s decision.
Key Questions and Answers
- What is the Aeroméxico-Delta joint collaboration agreement (JCA)? It’s an alliance formed in 2016 that granted antitrust immunity, allowing the airlines to coordinate routes and pricing, share revenues, and collaborate on flights between Mexico and the US.
- Why is the US DOT revoking the Aeroméxico-Delta antitrust immunity? The DOT cites changes in market conditions and Mexico’s alleged failure to comply with the existing bilateral air agreement.
- How will this decision impact VivaAerobus and Allegiant? Their similar agreement, set to begin in December 2021, will be affected as they aim to coordinate routes and pricing, share revenues, and collaborate on flights between Mexico and the US.
- What are the key arguments of the DOT? The DOT points to limited growth in available seats between Mexico and the US compared to competitors, as well as elements highlighted by the US Congress for granting antitrust immunity.
- How has Aeroméxico responded to the DOT’s decision? Aeroméxico acknowledged the decision, intends to submit a joint response with Delta, and emphasized their partnership’s adoption of international best practices.
- What is the status of the potential VivaAerobus-Allegiant alliance? The prospects for this partnership remain uncertain following the DOT’s decision on Aeroméxico-Delta.
