DOT Proposes Antitrust Immunity for Delta-Aeromexico
The U.S. Department of Transportation (DOT) has issued an order tentatively granting approval of, and antitrust immunity for, the proposed alliance agreements submitted by Delta Air Lines and Aeromexico.
Delta and Aeromexico are proposing to use the antitrust immunity to operate a joint venture between the U.S. and Mexico. If the application is granted final approval, the carriers would coordinate their network planning, pricing, and sales activities, as well as enhance the alignment of their respective frequent flyer programs.
The DOT order examines competitive conditions in a number of U.S.-Mexico markets, including markets to and from Mexico City and New York-JFK. As part of the tentative decision, the department is proposing, as a condition of approval, that the carriers divest enough takeoff and landing slots to support 24 new daily transborder services from Mexico City and six new daily transborder services from JFK.
DOT tentatively found these conditions as necessary to prevent harm to consumers resulting from the carriers’ dominant positions at the two airports, and the inability of new entrant carriers to access slots at the airports. The department is also proposing other conditions on its approval, including limiting the grant of immunity to five years.
JetBlue, a competitor of the proposed Aeromexico/Delta Air Lines joint venture, issued a statement commending the DOT including airport access provisions in its order and limiting the duration of antitrust immunity.
“In the increasingly consolidated airline industry,” said James Hnat, JetBlue’s executive vice president and general counsel, “only important protections such as ensuring airport access and term limits on immunity from antitrust laws will allow small but vital competitors like JetBlue to continue offering low fares and protecting the interests of consumers.”
The DOT’s initial order is a first step in a process. Interested parties have until November 30, 2016 to file comments on the case. DOT said it will review the comments before preparing a final decision.
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