Delta and Aeromexico will accept the terms dictated by the Department of Transportation (DOT) for approval of an antitrust-immune joint venture. But they aren't making the decision happily.

In the order finalized Dec. 14, the DOT required the Delta-Aeromexico partnership to give up 24 daily departure and landing slots at Mexico City's Benita Juarez Airport, where they currently control nearly half the slots.

The partnership must also divest of four daily slots at capacity-constrained Kennedy Airport in New York.

In order to boost competition, all the slots have to be turned over to low-cost carriers.

Per the DOT, the slot divestitures are to occur over the spring and fall of next year.

The joint venture, under which Delta and Aeromexico can coordinate on marketing, scheduling and pricing flights between the U.S. and Mexico, can begin once the carriers have completed transfer agreements on the first 14 slots at Benito Juarez and the first two slots at Kennedy. The partnership also applies to domestic and international connections from both countries. The grant of antitrust immunity will last for just five years.

Delta and Aeromexico sounded off to the DOT in a letter Wednesday even as they formally accepted those terms.

"In markets with robust competition, the public interest is not served by the government favoring a particular type of competitor, imposing a redistribution of assets, and deciding who should compete where," attorneys for the two companies wrote.

They went on to say that the DOT has set a well-established precedent of recognizing the consumer benefits of joint ventures, even when the airline partners would control a much larger share of the marketplace than the 25.4% of the U.S-Mexico market that Delta-Aeromexico will control.

"If [antitrust immunity] policy has changed such that [antitrust immune] alliances will only be approved after a reengineering of competition, the cost of such alliances will become so high that it will create serious questions about how [antitrust immune] alliances are formed in the future and jeopardize the substantial consumer benefits associated with such alliances," the carriers said.

In a press release Wednesday, Delta said the regulatory approval is an important milestone in its effort to acquire up to 49% of Aeromexico. Delta currently owns less than 5% of the carrier.

"Together, Delta and Aeromexico are stronger in the U.S.-Mexico market than either airline can be on its own," Delta CEO Ed Bastian said in prepared remarks. "The partnership will make it possible for us to offer customers more flights to more destinations, with more choices every time someone travels across the border."


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