By David Shepardson WASHINGTON (Reuters) -A U.S. appeals court late on Wednesday temporarily halted a government agency’s order to force Delta Air Lines and Aeromexico to unwind a joint venture by January 1. The airlines had sued to block the U.S. Department of Transportation order to repeal the nearly nine-year-old joint venture that lets the […]
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US court temporarily blocks USDOT order to unwind Delta, Aeromexico joint venture
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By David Shepardson
WASHINGTON (Reuters) -A U.S. appeals court late on Wednesday temporarily halted a government agency’s order to force Delta Air Lines and Aeromexico to unwind a joint venture by January 1.
The airlines had sued to block the U.S. Department of Transportation order to repeal the nearly nine-year-old joint venture that lets the carriers coordinate scheduling, pricing and capacity for U.S.-Mexico flights. The USDOT order was issued in September as part of several U.S. actions aimed at Mexico’s aviation sector over competition concerns.
The carriers said they faced substantial costs they could not recover even if a court later upheld the arrangement. The order from a three-judge panel cited a prior court decision on the standard for temporarily blocking administrative actions.
Delta said it appreciated “the court’s decision to pause the wind-down of the Delta/Aeromexico strategic partnership while it reviews the validity of the DOT’s order.”
Aeromexico in a statement noted the joint venture would remain in place as the court case proceeds.
USDOT declined to comment.
Last week, the Justice and Transportation Departments called the joint venture “legalized collusion” that controls “almost 60% of operations at the fourth-largest international gateway to and from the United States,” citing Mexico City flights.
Delta, which has a 20% stake in Aeromexico, has also argued that President Donald Trump’s administration is holding the joint venture to a stricter standard than other ventures including United Airlines and ANA.
The government has said anticipated problems from the venture include higher fares in some markets, reduced capacity and challenges for U.S. carriers due to inadequate competition.
In separate actions last month, the Trump administration revoked approval for 13 routes by Mexican carriers into the U.S. and canceled all combined passenger and cargo flights by Mexican airlines to the United States from Mexico City’s Felipe Angeles International Airport.
Transportation Secretary Sean Duffy said Mexico “illegally canceled and froze U.S. carrier flights for three years without consequences.”
Mexican President Claudia Sheinbaum said earlier she disagrees with the U.S. decision to revoke approval of the 13 routes.
(Reporting by David Shepardson; Editing by David Gregorio and Tom Hogue)