Aeromexico and Delta go on the offensive

Washington DC
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SkyTeam partners Aeromexico and Delta Air Lines are teaming up to solidify their presence in the erratic Mexican market by laying the groundwork for a potential joint venture.

In the wake of Mexicana's market exit more than a year ago and its on/off plans to relaunch, several carriers have moved to fill Mexicana's void, with low-cost Volaris ambitiously expanding in transborder markets.

Since December 2010, Volaris has added several transborder routes, including new flights to Chicago Midway and Las Vegas, and Fresno and San Diego in California, which joined existing services to Los Angeles, Oakland and San Jose.

Data collected by the Mexican government shows that Volaris' international passenger traffic more than doubled year-on-year in June. Volaris further expanded its transborder presence late last year with the launch of a connecting partnership with Southwest Airlines. The agreement now covers 26 cities in Southwest's US Midwest network and in the US northeast. Passengers from those cities can now connect on Volaris flights between Chicago Midway and Guadalajara.

Volaris has also won authority to launch flights from Monterrey to Chicago Midway and from Mexico City to Las Vegas and Los Angeles, which US authorities awarded to the carrier on the condition that the operating rights have to be returned to Mexicana if it relaunches services in some of the pairings. Volaris needed a grant of extra bilateral authority since Mexican carrier designations on the pairings were assigned to Mexicana and another Mexican airline.

Aeromexico has made its own cross border push, launching five routes in the past two months.

Now the carrier is moving to strengthen its transborder market through a new, exclusive USA-Mexico alliance with long-time partner Delta. The tie-up entails network-wide codesharing on flights between the two countries, within each carrier's domestic network and other international destinations. The new agreement stipulates the creation of a new sales team to offer joint contracts to corporate customers.

But the SkyTeam carriers' stress their new exclusivity agreement is just the start, emphasising that it builds the foundation "for a joint venture to better serve the USA and Mexico marketplace".

Delta's visible commitment to ensuring Aeromexico's long-term viability includes a pledge to invest $65 million giving it a small stake in the airline and a seat on the Mexican airline's board.

Delta and Aeromexico have extended their maintenance pact that was forged in 2006, with plans to opening a new facility in Mexico in 2013.