US Transportation Department Orders End to Delta-Aeromexico Joint Venture
The US Department of Transportation (DOT) has directed Delta Air Lines and Aeromexico to dissolve their joint venture by January 1, 2025. This nearly decade-long partnership, established in 2016, allows the two carriers to coordinate flight schedules and pricing on routes between the United States and Mexico.
Anticompetitive Concerns Drive Decision
In a filing released late Monday, the DOT cited ongoing anticompetitive effects in the US-Mexico City markets. The department stated that the joint venture grants Delta and Aeromexico an unfair advantage as dominant competitors, resulting in actual and potential harm to stakeholders, including consumers.
Airlines Respond With Disappointment
Both airlines expressed their disappointment with the DOT’s directive and are currently reviewing the order before deciding on future actions. Delta warned that unwinding the partnership could significantly harm US jobs, communities, and travelers between the two countries. Aeromexico noted that despite the order, the carriers will maintain reciprocal frequent flyer benefits and continue offering flights on each other’s networks.
Background and Broader Context
The Biden administration had previously considered revoking antitrust immunity for the joint venture amid longstanding US concerns over competitive dynamics with Mexico. The DOT proposed terminating the partnership in July, prompting objections from both airlines. They argued in filings that the joint venture contributed approximately $310 million to the US economy and that its dissolution could cede market share to competitors.
Importantly, the DOT’s order does not affect Delta’s 20% ownership stake in Aeromexico.
FinOracleAI — Market View
The forced dissolution of the Delta-Aeromexico joint venture is likely to have a negative short-term impact on both carriers, given potential disruptions to coordinated scheduling and pricing strategies that have underpinned market share and profitability in US-Mexico routes. The ruling introduces uncertainty around competitive positioning and may lead to increased competition, potentially pressuring fares and yields. Investors should monitor regulatory developments and any strategic responses from the airlines, including potential legal challenges or alternative partnership models.
Impact: negative
