The U.S. Transportation Department (DOT) says it will not renew antitrust immunity for the Aeromexico-Delta Air Lines transborder joint venture (JV) and will instead order for it be wound down, blaming Mexico for being “fundamentally out of compliance” with the bilateral air services agreement between the countries.

DOT said in the order issued Jan. 26 that it “tentatively dismisses” the carriers’ application for the renewal of the JV, in place since 2017, citing “recent actions” by the Mexican government related to Mexico City Benito Juárez International Airport (MEX) that the U.S. views as anticompetitive. 

These actions include the Mexican government forcing freighter flights out of MEX and mandating capacity reductions at MEX “to the detriment  of both current air carriers and potential new entrants,” DOT says.

According to the order, concerns over the actions at MEX “have been raised by the  U.S. government with counterparts at the highest levels within the government of Mexico in  formal consultations as being fundamentally out of compliance with the existing bilateral air service agreement and international norms governing capacity management at airports.”

DOT adds that “continued consultations” with Mexican authorities have led to no changes and that compliance with the air services accord is a prerequisite for an antitrust-immunized, transborder JV, which allows the carriers to coordinate schedules and collect revenue from cross-border flights on a metal-neutral basis.

DOT concludes that “adherence by the government of Mexico to its obligations under the U.S.-Mexico Aviation Agreement is no longer present.”

Once finalized, the order will terminate the Aeromexico-Delta JV, requiring it be wound down in the next IATA traffic season and obliging the SkyTeam airlines to file a wind-down plan with DOT.

The ruling, if finalized, constitutes a major blow to Aeromexico and Delta. The airlines had planned to ramp up the JV in the aftermath of Mexico’s safety status being upgraded by FAA in September 2023, allowing for new transborder expansion.

According to Delta, Aeromexico plans to operate nearly 60 daily departures to the U.S. from Mexico in July 2024. Delta plans to operate 34 daily frequencies to seven Mexican destinations in July 2024. Overall, the Aeromexico-Delta JV plans to offer 30% more seats on transborder routes in July 2024 versus July 2023.

DOT is particularly critical of the Mexican government for pushing freighter operators, including U.S. carriers such as FedEx and United Parcel Service, from MEX to Felipe Ángeles International Airport (NLU), which opened in March 2022. NJU, a former military base converted for commercial operations, is located about 30 mi. from MEX and is viewed by carriers as much less desirable for efficiently moving cargo through and around Mexico City.