Background on the Situation
In 2023, the Mexican government decided to rescind certain flight time slots for US airlines and forced US cargo airlines to relocate their operations in Mexico City. This decision has led to tensions between the United States and Mexico, with the US Transportation Department taking action against Mexico.
Who is Involved?
The key players in this situation are the US government, specifically the Department of Transportation (DOT), and the Mexican government. Delta Air Lines is also involved, as it has a joint venture with Aeroméxico. The Mexican airlines and cargo companies are indirectly affected by these developments.
US Actions and Demands
On Saturday, the administration of Donald Trump announced a series of measures against Mexico due to its decision in 2023. The US Transportation Secretary, Sean Duffy, stated that the department might reject Mexico’s flight requests if the government does not address concerns about decisions made in 2022 and 2023.
The DOT proposes removing the anti-monopoly immunity from Delta Air Lines’ joint venture with Aeroméxico to tackle competition issues in the market.
Why is Mexico Relevant?
Mexico is the most popular international destination for US travelers. The Delta Air Lines has not yet commented on this situation.
According to the DOT, Mexico has not complied with an air agreement since 2022 when it abruptly canceled slots and forced US cargo airlines to relocate operations in 2023.
Mexico’s Non-Compliance
The US Transportation Department claims that Mexico failed to keep its promise, disrupted the market, and left US companies with additional costs of millions due to restricted flight schedules and cargo operations.
DOT’s Orders
The DOT issued two orders requiring Mexican airlines to submit flight schedules for all their operations in the US and obtain prior approval from the country before operating any large passenger or cargo charter flights to or from the US.
The DOT states that Mexico has significantly altered the playing field for airlines, reducing competition and allowing dominant competitors to gain an unfair advantage in the EU-Mexico market.
Impact on Stakeholders
- Airlines Seeking Market Entry: The actions of Mexico negatively affect airlines attempting to enter the market.
- Existing Competitors: Existing competitors are also impacted by these changes.
- Air Travel and Cargo-Dependent Consumers: Air travel and cargo shipment consumers, especially those relying on urgent air freight between the two countries, are affected.
- Other US Economic Actors: Other actors in the US economy are impacted by these developments.
Potential Delta and Aeroméxico Consequences
If the US revokes anti-monopoly approval for Delta and Aeroméxico, they would be required to cease price-related cooperation, capacity management, and revenue sharing. However, Delta could still maintain its stake in Aeroméxico, keep all existing flights unimpeded in the US and Mexico market, and continue the partnership.
