Aeroméxico (AM, México City International) and Delta Air Lines (DL, Atlanta Hartsfield Jackson) have rejected the US Department of Transportation's (DOT) proposed conditions for the granting of antitrust immunity for their impending joint-venture to operate flights between Mexico and the United States.

Last month, the DOT said in its tentative ruling that although the alliance would not substantially affect competition in the US-Mexico market, it did have concerns Delta and AeroMéxico would be able to exert market power at México City International and New York JFK where there are already limited opportunities for new entrants.

Therefore, to ensure greater openness and competition in those markets, the DOT proposed, as a condition for approval, that the carriers divest twenty-four takeoff and landing slots at Mexico City and six at New York JFK. Additionally, any antitrust immunity granted would only be valid for a maximum of five years.

However, in their joint response submitted on November 30, AeroMéxico-Delta rejected the DOT's terms and conditions labelling them "unprecedented, arbitrary, and untethered" given that Mexico's Anti-Monopolies Commission (Comisión Federal de Competencia Económica - COFECE) had only required the alliance to relinquish eight México City slot pairings to secure its green light.

The two carriers argued that by exceeding COFECE's remedy, the DOT would threaten the alliance's consumer benefits thereby violating its own tenet that the divestitures be kept to a minimum so as not to significantly impact any of its anticipated public benefits.

"The proposed remedies would have a detrimental impact on the efficiency of Aeroméxico’s hub-and-spoke operations in Mexico and Delta’s hub operations at JFK, as well as on the utility of the combined network," they argued. "Loss of the proposed remedy slots at JFK would require Delta to pull down flights, diminishing the benefits delivered by the joint network and degrading connectivity with the entire United States by negatively impacting JFK as a connecting hub to and from Europe. Likewise, DOT’s slot remedy would require Aeroméxico to eliminate connecting and transborder flights at México City."

In addition, AeroMéxico-Delta targetted the five-year immunity period claiming that its brevity, as well as the possibility of a non-renewal thereafter, would require them to structure their agreements in such a way as to ensure a swift and clean disentanglement. Given uncertainties about the alliance's longevity, Aeroméxico-Delta said they may be forced to curtail the amount of investment put into it thereby diminishing the "quality" of their "joint offerings".

In terms of responses from rival operators, JetBlue Airways (B6, New York JFK), Southwest Airlines (WN, Dallas Love Field), and Volaris (Y4, México City International) have all asked the DOT to finalise the tentative decision "as is" while Mexico's Interjet (AIJ, Toluca) has asked that Delta be required to relinquish at least ten New York JFK slots given the difficulties new entrants face in gaining access to the US-Mexico market.

As it stands, AeroMéxico-Delta have warned they would reconsider their joint-venture should the DOT finalize its preconditions in their current state.