A new air transport agreement between the United States and Mexico just went into effect and it could be great news for Delta’s $1.5 billion joint venture with Aeromexico.
Atlanta-based Delta and Mexico’s national airline have been seeking anti-trust protection for a $1.5 billion joint venture that will allow the two companies to coordinate flights and fare prices.
Delta also announced last year that it intends to acquire up to 49% of Mexico City-based carrier.
The new agreement, which went into effect on Sunday, could pave the way for the joint venture’s approval.
“This new agreement will expand travel and trade between the United States and Mexico, and facilitate broader economic growth in both countries,” Secretary of State John Kerry and Transportation Secretary Anthony Foxx said in a joint statement on Friday.
“Passenger carriers will be able to provide new options for travellers and enhance competition,” Foxx said.
The new agreement, which was signed on December 18, 2015, works as a de facto Open Skies agreement that removed many of the barriers that existed in the previous version that was signed in 1960.
As a result, US airlines will now have significantly improved access to the Mexican market while Delta and Aeromexico’s joint venture edges closer to reality.
Even though the new agreement clears the path for the joint venture, Delta and Aeromexico will still likely have to give up some of its slots and gates in Mexico City to gain approval, Airways senior business analyst told Business Insider.
While the joint venture received the green light from Mexican regulators earlier this year, the airlines are still awaiting approval from the US Department of Transportation.
Rivals such as JetBlue have opposed the joint the venture — insisting that the new entity is anti-competitive. The main crux of the opposition lies with access to Mexico City International Airport — the country’s highly congested main international gateway.
“We are trying to gain further slots at the airport and that is why we are opposed to the proposed Delta-Aeromexico joint venture, which would allow their further growth while others are unable to grow,” JetBlue CEO Robin Hayes said in an interview published by the International Air Transport Association earlier this year.
“If it goes ahead, these airlines will control more than half of the slots at the airport. JetBlue, on the other hand, has some challenging slots times, leaving early in morning,” Hayes said.
Representatives from Delta Air Lines and JetBlue were not immediately available for comment.
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