Delta Air Lines urges Washington to think again over Aeromexico plan

Delta's lucrative arrangement with the biggest airline in Mexico is at risk, the carrier says, because of new proposals by the US government that it says would undermine the tie-up.

Delta Air Lines says it may have to abandon a tie up with Aeromexico if the US government does not change its mind over slot losses. Chris O'Meara / AP

Delta Air Lines said it may re-examine a coveted partnership with Mexico’s largest airline if the US government does not back down on a proposal that would force the carriers to give up some flying rights in Mexico City and New York.

The changes ordered by the transport department “would severely diminish the economic viability” of the deal with Grupo Aeromexico and prompt the airlines “to reconsider undertaking it”, Delta said at the weekend.

In providing tentative authorisation for the partnership this month, US regulators said the airlines would have to relinquish takeoff and landing rights for 24 daily cross-border round trips in Mexico City and six from New York’s John F Kennedy International Airport. Giving up rights for that many trips would decrease the revenue from the joint venture “by hundreds of millions of dollars”, Delta said.

Mexico’s competition regulator called for Delta and Aeromexico to give up only eight pairs of takeoff and landing rights in Mexico City. The US government’s requirements are “unprecedented” and “arbitrary,” said Delta, which is is seeking to expand in Mexico as it deepens its business ties in developing countries.

The Atlanta-based carrier asked the transport department to approve lesser conditions for the partnership, which would allow the airlines to coordinate routes and pricing without violating antitrust rules. Delta and related entities already hold about 17 per cent of Aeromexico, and the US airline is seeking to boost that stake to 49 per cent.

* Bloomberg

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