Advertising
  • News
  • Airlines
  • Business strategy
  • Aeromexico and Delta launch long-sought joint venture

Aeromexico and Delta launch long-sought joint venture

Aeromexico and Delta Air Lines inaugurated their immunised joint venture today, after facing a drawn out regulatory approvals process for the partnership.

The tie-up allows the SkyTeam Alliance carriers to coordinate fares and schedules, as well as jointly market and sell tickets in the Mexico-US market.

"This is special, this is the first short-haul, high-frequency joint venture in the world today," said Anko van der Werff, chief revenue officer of Aeromexico, at an event to mark the carriers' joint sponsorship of the Mexican national football team on 3 May.

Previous immunised partnerships have been in intercontinental markets, for example the American, British Airways, Finnair and Iberia joint business across the Atlantic, and the ANA and United Airlines tie-up across the Pacific.

Air Canada and United received approval for a transborder joint venture between Canada and the USA in 2012 but never implemented the partnership.

Aeromexico and Delta plan to grow under the tie up. This will include growth in hub-to-hub markets, Mexican cities to the USA and US cities to Mexican destinations, including leisure points, says van der Werff.

Aeromexico and Delta together fly nearly 22% of the capacity in the US-Mexico market, Innovata FlightMaps Analytics shows. Their closest competitor American Airlines flies 18.7% of the capacity in the market and United Airlines 16.7%.

"Once the teams can get together to plan the new network," said Steve Sear, president of international at Delta, at the event. "Ultimately, it's to have more network connections, better timed connections and sometimes more frequencies. It helps both of our networks perform better."

For example, this could include making sure the two carriers do not operate flights in the same time slots in key markets, like Mexico City-New York.

The beginnings of the new partnership are already evident. Aeromexico moved to terminal 4 at New York John F Kennedy, home to Delta's hub at the airport, on 1 May and Delta will move to terminals 2 and 3 in Los Angeles, co-locating with Aeromexico, by 17 May.

The joint venture with Aeromexico is the latest in Delta's successful equity partnership strategy. The US carrier owns just over 36% of its Mexican partner and plans to raise that stake to 49% by the end of the second quarter.

Delta pursued a similar strategy with Virgin Atlantic Airways, which it acquired a 49% stake in in 2012. The carriers launched a transatlantic joint venture in January 2014, which they have used to expand their share of the UK-USA market.

The US carrier has also invested in Gol and plans to apply for antitrust immunity for a joint venture once the Brazilian legislature ratifies the Brazil-US open-skies agreement.

The launch of the Aeromexico-Delta partnership today is just another step in a long process for the carriers that began with their first codeshare agreement in 1995.

The airlines first applied for immunity in March 2015 and received regulatory approval from both the Mexican and US governments after agreeing to divest 24 slot pairs at Mexico City and four at New York JFK in December 2016. Despite an initial 1 April launch target, they had to hold off on implementation until the agreed to slot transfers were completed on 3 May.

The DOT confirmed the transfers and finalised its approval of the immunised partnership in a letter to Aeromexico and Delta on 4 May.

"There's going to be a hell of a lot of work for us to get this right and make sure we serve our customers," says van der Werff. "We will win, we're committed."

Related Content
Advertising

Advertising
What's Happening Around "Delta Air Lines"