Delta-Aeromexico deal gets tentative USDOT approval

As Delta Air Lines (Delta) looks to acquire a 49% stake in Grupo Aeromexico SAB de CV (Aeromexico), the US Department of Transport (DOT) has given provisional agreement for the two carriers to set their own prices and coordinating schedules for their US-Mexico flights. This has all but paved the way for the two carriers to take a dominant position in in the second-busiest market for flights to and/or from the U.S. with immunity from U.S. antitrust law.
The approval from the DOT is, unusually, for a period restricted to five years in order for any antitrust immunity to be reviewed in light of uncertainty over whether divestitures and reforms in Mexico City will ensure travelers are offered low fares.
While objections have to be lodged with the DOT by November 30, the approval also comes with certain other conditions, including the relinquishing of 24 take-off and landing slots at Mexico City’s airport, and six slots at John F Kennedy Airport in the U.S. The intention is to provide room for low-cost carriers to add additional flights.
Delta has confirmed that it will be reviewing the tentative decision and that the carrier was looking forward to implementing the agreement with Aeromexico. According to Robert Mann, an industry consultant, this decision “really gives Delta a huge advantage” over United Continental Holdings Inc (UAL.N) and American Airlines Group Inc (AAL.O), who will not be able to compete for Mexico flights outside their major hubs.