The US government has threatened widespread restrictions on Mexican airlines operating within the US, and said it will reverse approval of the joint venture (JV) contract between Delta Air Lines and AeroMexico, among other things.
The US Department of Transport (DOT) has revealed actions planned for July 19 in response to what it describes as violations of the US air transport agreement in favour of Mexico Airlines and anti-competitive actions.
The Trump administration's actions include a temporary reversal of the Delta and Aeromexico JV, a partnership that has been active for about eight years. DOT points out that the Delta-Aeromexico JV was set to expire in 2020, but has been extended to be pending review.
“We will temporarily disapprove the JV and decide to withdraw the grant of an effective (anti-trust immunity) after being blown away by the current wind,” says the order signed by Transport Secretary Sean Duffy.
“Based on our review, there are no requirements for immunized JVs, and immunized JVs no longer serve the public interest based on anti-competitive measures imposed by the Mexican government, which is largely distorting the market,” says DOT.
“The division is committed to restoring equal arenas for all market participants as soon as possible, so the new application will remain suspended until it completely resolves the highly anti-competitive and distorted market situation in the US Mexican market.”
Delta reduces the surge in action by claiming that DOT's tentative proposal to end its partnership with Aeromexico will do much harm to consumers traveling “the US and Mexico, the US employment, community and transborder competition.”
Delta holds 20% ownership of AeroMexico and is estimated to have a carrying value of $376 million, according to its latest 10-Q filing with the U.S. Securities and Exchange Commission.
In response to the DOT's allegations, Delta and AeroMexico filed a four-week extension on July 21, “to address the issue fully” raised by the department's 40-page order.
“The department made many observations and claims that ensure a specific and detailed response,” the airline says.
In its submission, Delta and Aeromexico said they intend to conduct a poll of airlines that are affected by DOT's actions and support “advising the outcome department.”
Delta told Flight Global “We look forward to reviewing a series of dot orders regarding Mexico's compliance with the US Mexican Air Transport Agreement and working with the Trump administration to resolve the issues raised in the order.”
Slots have been scrutinized
Regarding DOT's wider focused actions, the department argues that Mexico has failed to comply with the air transport agreement since 2022.
“By limiting slots and requiring all cargo operations to travel from (Benito Juarez International Airport), Mexico broke its promise, disrupting the market, and American companies have kept their bags for millions with increased costs.”
Starting in May 2022, the Mexican government has requested that the airline be operated at New Felipe Angels International Airport, farther from Mexico City than its main hub, Benito Juarez.
It also abandoned the availability of slots in Benito Juarez, which was used by both US and Mexican passenger aviation.
“Mexico is away from commitment,” Dot said, “there is no transparent, non-discriminatory slot allocation regime that complies with international standards and is consistently applied across the country's airports.”
Dot's order says the “arbitrary outlook for action” raised concerns about “long-term competitiveness of the US Mexican market.”
The IATA encourages “direct dialogue” to resolve conflicts.
“The US and Mexican aviation market is one of the largest among the world's neighbours and one of the major driving forces of both economies,” said Peter Celda, Regional Vice President of the Americas at IATA.
“We expect both parties to engage in a direct dialogue to seek balanced and constructive solutions from all involved.”
The IATA, which appears to acknowledge the contradictions in Mexican approaches to slot allocation, admits it has been in contact with Mexican authorities for many years to advocate for “global acceptance of global airport slot guidelines.”
“This work remains a priority given that many airports across the country, particularly Mexico City International Airport, continue to face capacity constraints,” Iata said.
According to the IATA, aviation activities between the two countries donate an estimated $83 billion to the Mexican economy, accounting for almost 5% of gross domestic product.
In response, DOT is currently requiring that by July 29th, Mexican airlines will list their agents a list of flight schedules to the US.
Furthermore, within 30 days, DOT will prohibit Mexican airlines from using charter flights using large aircraft to and from the United States unless DOT approves those flights.
Under the new restrictions, Mexican airlines must submit to DOT for these approvals, known as license statements, at least 30 days prior to operation of the flight.
“The department reserves the right to disapprove flight requests from Mexico if the state fails to take corrective action,” DOT says.
