US orders Delta and Aeromexico to dissolve their partnership over fairness concerns in Mexico

Key Points

• The U.S. Transportation Secretary has ordered Delta and Aeromexico to dissolve their partnership due to concerns that Mexico is unfairly benefiting its domestic airlines.
• Antitrust immunity allowing the airlines to cooperate on pricing and scheduling flights will be revoked, impacting their joint operations since 2016.
• Delta and Aeromexico argued that this decision could significantly harm U.S. jobs and tourism, projecting a loss of over 200,000 tourists between the U.S. and Mexico.
• The order will take effect in January 2024, although there will be no immediate changes to flights or loyalty programs while the two airlines assess their options.

U.S. Transportation Secretary Sean Duffy is following through on his threat to force Delta and Aeromexico to dissolve their longtime partnership because of his concerns that Mexico isn't being fair to U.S. airlines.

Duffy announced Tuesday that the Transportation Department is revoking the antitrust immunity the airlines have had since 2016 that allowed them to price and schedule their flights jointly and share revenue. He said it doesn't make sense to maintain that arrangement as long as Mexico is giving its domestic airlines an unfair advantage through limits it placed on passenger and cargo flights into Mexico City several years ago.

This airline dispute is another front in the broader trade dispute that has the two countries at odds over President Donald Trump's tariffs and his concerns about border security. Duffy is focused on whether Mexico’s actions to force airlines to move out of the main Benito Juarez International Airport to the newer Felipe Angeles International Airport more than 30 miles (48.28 kilometers) away violated a trade agreement between the two countries and gave domestic airlines the advantage.

Before Mexico forced cargo airlines to start using Felipe Angeles in 2022, all the major international airlines had shunned the airport that is so far from the center of Mexico City that is can take 2 1/2 hours to drive to the terminal. At the same time, Mexico also cut some of the slots available at Benito Juarez to allow for construction at the airport that Duffy says still hasn't happened.

“Empty promises mean nothing. After years of taking advantage of the U.S. and our carriers, we need to see definitive action by Mexico that levels the playing field and restores fairness,” Duffy said.

Back when Duffy announced this threat in July, Mexican President Claudia Sheinbaum said that the transfer of cargo operations from Mexico City’s main airport to the new one was a technical decision and that any new change should be based on technical criteria and prioritizing safety.

“There is no reason to impose any sanctions related to this matter,” she said. According to her, Mexico’s decision was not a decision against any U.S. airlines, but due to the need to relieve congestion at the capital’s old airport, Benito Juárez.

She acknowledged that some U.S. companies complained when the change happened, but she said that they adapted to the new situation.

The two airlines said they are disappointed in Duffy's decision, but they haven't yet decided whether to challenge it. Delta and Aeromexico have argued in regulatory filings that they shouldn't be punished for the actions of the Mexican government and consumers and the economies of both countries will be hurt by this.

Mexico is the top foreign destination for Americans with more than 40 million passengers flying there last year. Delta and Aeromexico operated more than 30,000 flights between the United States and Mexico last year, according to the aviation analytics firm Cirium.

Delta said this decision “will cause significant harm to U.S. jobs, communities and consumers traveling between the U.S. and Mexico.” Aeromexico said this “overlooks the benefits that the alliance has brought to connectivity, tourism, and consumers in Mexico.”

The two airlines will continue to cooperate but won't be able to work together as closely. They said in regulatory filings that they believe the loss of direct flights would prompt over 140,000 American tourists and nearly 90,000 Mexican tourists not to visit the other country and hurt the economies of both countries with the loss of their spending.

Delta and Aeromexico said their alliance hasn't kept other airlines from competing even as they grew their business. Competing airlines Viva and Volaris both expanded their operations at Benito Juarez airport after Interjet went out of business during the pandemic, although Aeromexico also grabbed half that airline's slots and expanded in Mexico City.

Duffy's order would take effect in January. Until then, there won't be any changes to flights or loyalty programs at the airlines.