Delta, Aeromexico ask court to block Trump order forcing end to JV
By David Shepardson
WASHINGTON (Reuters) -Delta Air Lines and Aeromexico asked a U.S. appeals court on Friday to halt a Trump administration decision forcing them to unwind a joint venture that allows the carriers to coordinate planning, pricing and capacity for U.S.-Mexico flights.
Aeromexico told the 11th Circuit Court of Appeals that it would face significant costs it would not be able to recoup even if the court later approved the arrangement.
In September, the U.S. Department of Transportation ordered the nearly nine-year-old joint venture to be terminated by Jan. 1 as part of several actions against Mexican aviation, citing competition concerns.
Delta said it would still face losses absent a court order delaying the requirement until the verdict.
The airline said its flight operations “will face severe disruptions” and called the USDOT action “textbook arbitrary and capricious” and unrealistic, based on “unproven, irrelevant, and speculative reasoning.”
The Atlanta-based airline has already canceled two US flights to Mexico as a result and “may need to cancel additional cross-border flights for next summer.”
Delta also argued that USDOT held its joint venture to a stricter standard than other joint ventures, including United Airlines and ANA.
USDOT, which on Friday rejected the airline’s request to delay the order, had no comment.
Aeromexico says order requires “guidance”
hiring existing and new staff, establishing a new brand presence in the U.S., separating its information technology platforms from Delta’s for U.S. pricing and sales.”
In August, USDOT said the joint venture should end because of “continued anticompetitive effects that provide an unfair advantage to Delta and Aeromexico in the U.S.-Mexico City markets.”
Carriers account for approximately 60% of passenger flights to the United States from Mexico City Airport. The airport is the fourth largest international gateway to and from the United States.
Aeromexico and Delta argued that they had a 20% seat share in the US-Mexico market, while American Airlines said they had a 21% seat share, indicating that this was a very competitive market.
USDOT, which does not want Delta to sell its 20% stake in Aeromexico, said potential problems from the venture include higher fares in some markets, reduced capacity and difficulties for U.S. carriers due to government intervention.
Delta argues that if the joint venture disappears, up to $800 million in annual consumer benefits could evaporate, two dozen routes could be canceled and existing planes could be replaced by smaller planes.
(Reporting by David Shepardson; Editing by Richard Chang and Sam Holmes)
