The US Department of Transportation (DOT) has tentatively granted antitrust immunity to Delta Air Lines (DL, Atlanta Hartsfield Jackson) and WestJet (WS, Calgary) for their proposed cross-border joint-venture but has ordered the carriers to exclude WestJet's LCC subsidiary Swoop (Hamilton, ON) from the partnership.

In addition, the DOT ordered the carriers to divest eight slot pairs at New York La Guardia. The tentative approval also requires WestJet to provide interline access to certain US carriers and the removal from the agreement of "exclusivity provisions that could prohibit or limit a carrier from engaging in a business relationship with another carrier". The DOT also pledged to review the JV in five years' time.

"Without such conditions, we have assessed that the alliance could be harmful to competition without sufficient countervailing public benefits... Subject to remedies to address our concerns, the proposed immunized alliance is unlikely to materially harm competition in relevant markets," the DOT said.

The tentative order to show cause was issued on October 23, more than two years after WestJet and Delta Air Lines applied for the antitrust immunity. Other parties have 14 days to file potential objections.

According to DOT analysis, the proposed JV (including Swoop) would have a 27% market share by capacity of the US-Canada market, based on pre-COVID data for 2019. Excluding Swoop, the share would be 26% (of which 15% is borne by WestJet and 11% by Delta). While that would give the JV a firm second place in the market, it would still lag behind market leader Air Canada (AC, Montréal Trudeau) with a 45% share. Air Canada has a limited cross-border alliance with United Airlines (UA, Chicago O'Hare), increasing their joint share to 57% by capacity.

While WestJet currently does not serve the US due to ongoing COVID-related border restrictions, it holds eight slot pairs taken over from Delta itself during its DOT-mandated divestment in 2011. Delta is by far the largest carrier at La Guardia with a 43.8% market share by the number of departures and a proportionate share of slots.