Delta and Aeromexico Warn of Major Route Cancellations if ATI Ends

Delta Air Lines and Aeromexico have alerted the US Department of Transportation (DOT) to the severe repercussions that would ensue if their joint cooperation agreement’s antitrust immunity (ATI) is terminated as scheduled on October 26, 2024. The airlines forecast the cancellation or reduction in capacity of 23 non-stop frequencies across 21 routes between the United States and Mexico, impacting approximately 1.8 million round-trip seats annually. Specifically, 16 routes face outright cancellation, including services from Atlanta to León/Guanajuato, Merida, and Querétaro, among others. Additionally, routes such as Atlanta to Guadalajara and Mexico City are expected to see downgrades in aircraft size, reducing available seats and significantly impacting transborder connectivity.

The airlines’ submission to the DOT outlines the broad economic and competitive consequences of terminating their ATI, estimating a potential loss of USD834 million annually in increased fares for the communities they serve. They argue that ending the ATI would not only undermine competition in the US-Mexico market but also fail to address the unilateral actions of the Mexican government, which have prompted this regulatory scrutiny. These actions include the forced relocation of all cargo flights from México City International to México City Felipe Angeles and successive capacity reductions at México City International.

Delta and Aeromexico have criticized the DOT’s tentative decision to dismiss the renewal of their ATI as rash and counterproductive, proposing alternative measures to address concerns with the Mexican government’s policies. They suggest invoking Part 213 procedures to impose restrictions on all Mexican airlines serving the United States, rather than penalizing the private carriers for government actions.

The potential unwinding of the ATI also raises concerns for job security and labor conditions for employees at both airlines, as highlighted by Aeromexico’s pilot union in a separate filing. Meanwhile, VivaAerobus and Allegiant Air, facing their own challenges with a suspended ATI application, have requested equal consideration by the DOT. They argue that failing to do so would result in anticompetitive outcomes, as their planned alliance cannot proceed without antitrust immunity.

This development has attracted mixed reactions from the aviation industry, with American Airlines supporting the DOT’s decision, citing a worsening implementation of the fully liberalized air transport agreement between Mexico and the United States. The situation underscores the complex interplay between regulatory decisions, airline operations, and international diplomatic relations in the aviation sector.