Delta and Aeromexico File for Joint Venture

The application marks a significant step in the creation of a $1.5 billion joint venture which will allow Delta and Aeromexico to compete more effectively on routes between the two countries.

Both Delta Air Lines and Grupo Aeromexico have filed an application with the US Department of Transportation (DOT) seeking antitrust immunity for a new joint venture on flights between the United States and Mexico.

The application marks a significant step in the creation of a $1.5 billion joint venture which will allow Delta and Aeromexico to compete more effectively on routes between the two countries.

"Mexico is the most popular international destination for Delta customers, and our proposed joint venture will offer our customers more schedule and destination choices, whether travelling for business or pleasure," said Ed Bastian, Delta's President.

The proposed joint venture will allow both airlines to offer an expanded network within Mexico, with connections to US destinations such as Los Angeles and New York.

Aeromexico’s hubs, which include Mexico City, Monterrey, Guadalajara and Hermosillo, will give Delta customers better access to cities within Mexico.

“We are thrilled at this opportunity to further deepen our relationship with Delta. The potential to align our networks and scheduling means that we will be able to offer greater customer choice than we would have been able to offer individually,” said Andres Conesa, CEO of Grupo Aeromexico.

Delta will also provide Aeromexico with a broad North American network to include Atlanta, Detroit, Los Angeles, Minneapolis, New York, Salt Lake City and Seattle, all of which are Delta hubs.

If approved by both US and Mexican regulators, the agreement will also increase shared investments in airport lounges and gates, and boost mutual sales and promotions. The relationship between the two airlines started with a codeshare agreement in 1994, and now the two airlines offer more than 4,000 weekly codeshare flights, representing more than 80 daily trans-border round-trip flights.

The SkyTeam members have both stated that their plans to engage in a joint venture began last year, and the plan for a deeper partnership comes as both the US and Mexico are set to remove limits on the number of carriers that can serve on the US-Mexico city pairs from January 1, 2015. Delta and its pension trust also hold a combined 9 percent stake in Aeromexico .