Aeromexico and Delta to deepen Mexico - USA Cooperation

Subject to the required economic competition authority’s approvals, the airlines expect to offer an expanded network, enhancing routes and schedules, concurrently increasing opportunities to co-locate and invest in airport facilities by improving gates, lounges and the overall connecting experience. Additionally the airlines will increase joint sales and marketing initiatives.

Latin American giant Grupo Aeromexico and US major Delta Air Lines have filed an application with the Mexican Comision Federal de Competencia Economica (Federal Economic Competition Commission) for a Joint Cooperation Agreement on flights between the United States and Mexico. This application marks a significant step in the process to further deepen the commercial relationship that both airlines have had for over 20 years.

The filing follows a similar application to the US Department of Transportation (DOT) at the end of March 2015 to develop a business partnership that seeks to offer more travel options and new destinations to passengers in both countries. Currently Delta and Aeromexico offer more than 4,000 weekly codeshare flights, representing more than 80 daily transborder round-trip flights.

Subject to the required economic competition authority’s approvals, the airlines expect to offer an expanded network, enhancing routes and schedules, concurrently increasing opportunities to co-locate and invest in airport facilities by improving gates, lounges and the overall connecting experience. Additionally the airlines will increase joint sales and marketing initiatives.

"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, president, Delta Air Lines. "Approval of antitrust immunity will allow travellers to fully benefit from all the aspects of a future Delta-Aeromexico joint venture, including the combination of two complementary networks."

Through the proposed joint venture, the airlines will offer an expanded network within Mexico and connections to US business centers in Los Angeles and New York. Aeromexico's hubs – Mexico City, Monterrey, Guadalajara and Hermosillo – will give Delta customers greater access to cities throughout Mexico, while Delta will provide Aeromexico with a broad North American network via Delta's key hubs, including Atlanta, Detroit, Los Angeles, Minneapolis, New York, Salt Lake City and Seattle, and a strong marketing presence throughout the US.

Delta and Aeromexico launched their first codeshare in 1994 and both became founding airlines of SkyTeam in 2000. In 2011, Delta entered into an enhanced commercial agreement with Aeromexico, and in 2012, Delta invested $65 million in shares of Grupo Aeromexico, the parent company of Aeromexico.

According to data from OAG Schedules Analyser, Aeromexico and Delta are the number three and four carriers in the market between Mexico and the USA by capacity behind United Airlines and American Airlines. However, when you combine their operations as per the proposed co-operation they grow to become market leader with a 27.0 per cent share, based on published schedules for 2015.

The schedule data shows that overall capacity between Mexico and the United States will grow to over 30 million annual seats this year with a forecasted rise of 10.3 per cent – this follows a 9.0 per cent rise in 2014 and a 9.9 per cent growth in 2013. The size of the market is similar as that between the UK and Spain (36.5 million seats in 2015), but when you factor in the additional connection options Delta and Aeromexico could offer through the cooperation it grows significantly.