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DOT unswayed by Delta-Aeromexico in JV decision

The US Department of Transportation has made final its conditional approval of anti-trust immunity for Delta Air Lines and Aeromexico, requiring slightly fewer slot divestitures from the airlines but mostly upholding its earlier proposed conditions.

The two SkyTeam carriers have seven business days to accept or reject the new requirements. A Delta spokesperson says the airlines are reviewing the order.

Delta and Aeromexico, which require anti-trust immunity to launch a US-Mexico joint venture, had argued against the DOT's conditions when the regulator issued its tentative approval in November. However, the carriers failed to persuade the agency to significantly amend its conditions.

"The Department found these conditions necessary to prevent harm to consumers that would result from the carriers’ dominant positions at MEX and JFK and the inability of new entrant carriers to access slots at the airports," says the DOT.

A condition that requires Delta and Aeromexico to divest 24 slot pairs at Mexico City airport remains unchanged. At New York John F Kennedy, the airlines are now required to divest four slot pairs - two fewer than originally proposed by the DOT.

The agency loosened the JFK condition after taking into account the argument that Newark is a substitute airport. Four JFK slot pairs are the equivalent of Aeromexico's four times daily service to Mexico City, notes the DOT.

Delta also operates nonstop on the route, offering nine flights weekly, FlightGlobal schedules data show.

Of the four JFK slot pairs, the agency is limiting to two the number of slot pairs that must be divested during the peak hours of 15:00 to 20:59.

"This will limit the loss of what are presumably the most financially and operationally valuable slots to the joint applicants," says the agency.

The DOT had earlier proposed that divested slots go to low-cost carriers, but said JetBlue Airways and Interjet are ineligible to receive slots at JFK and Mexico City respectively due to their sizable slot portfolios at the airports.

Both Interjet and American have objected to this proposal, while Southwest said any divested slots should go only to US low-cost carriers.

The agency disagrees with the three carriers, saying that Southwest has offered no evidence to show that competition from Mexican low-cost carriers is "any less vigorous or of any less quality".

"Interjet and American’s arguments that they should be eligible to receive MEX slots are misplaced," adds the DOT. "By its own admission, Interjet has over 26% of the slots at MEX, more by far than any other carrier besides Aeromexico. Interjet does not need assistance to achieve competitive access at MEX; it already has it."

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