DOT approves Delta-WestJet venture -- with conditions

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The DOT decision comes nearly three years after Delta and WestJet applied for antitrust immunity.
The DOT decision comes nearly three years after Delta and WestJet applied for antitrust immunity.

The DOT has tentatively approved a planned antitrust-immune joint venture between Delta and Canada's WestJet. However, the two carriers would have to surrender landing slots at New York's LaGuardia Airport and offer other concessions as a condition of the approval.

Friday's DOT decision came nearly three years after Delta and WestJet applied for antitrust immunity, which would allow the two carriers to jointly schedule, market and operate flights between the U.S. and Canada. Since 2012, Delta and WestJet have codeshared on U.S.-Canada routes.

• Related: Airline joint ventures draw greater scrutiny from regulators

With approval of the joint venture, Delta and WestJet would have 27% of the U.S.-Canada market share, compared to 45% for market leader Air Canada. In the application, the carriers argued that approval would lead to significant capacity increases and the launching of new routes, thereby benefitting consumers. The carriers' route networks are largely complimentary, overlapping only on Toronto-New York LaGuardia.

Still, the DOT viewed the proposal with skepticism. If the application were to be approved without conditions, the department said, the joint venture would likely restrain competition, thereby harming the public interest.

The DOT instead proposed approval contingent upon the carriers surrendering a combined 16 daily landing and departure slots at capacity-constrained LaGuardia, where Delta conducted 45% of operations prior the Covid-19 pandemic. The department noted that since it expects air travel to eventually rebound, it reviewed the application using market data from before the pandemic.

The agency is also calling for other concessions from Delta and WestJet. Notably, WestJet's ultralow-cost subsidiary Swoop would not be allowed to be part of the joint venture. Also, WestJet would be required to provide interline access to requesting U.S. carriers except United, which is already part of antitrust-immune alliance with Air Canada. Finally, the terms of the joint venture would be subject to a DOT review after five years to determine whether it has led to consumer benefits.

Delta currently has joint venture partnerships with Korean Air, Aeromexico and Air France-KLM/Virgin Atlantic and is also seeking joint venture approval with Latam.

The terms proposed by the DOT for a Delta/WestJet joint venture are similar to the conditions the department placed in 2016 on Delta's antitrust immunity with Aeromexico. That partnership is subject to a five-year review, and the carriers were required to surrender landing slots in Mexico City and at New York JFK. Delta and Aeromexico accepted those terms reluctantly but only after offering scathing criticism of the determination.

Interested parties now have 14 days to comment on the DOT proposal ahead of an eventual final order.
 

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