DL and Aeromexico file ATI/JV application

[WorldTraveler]

DL's application is based on existing service and is not based on speculation about what carriers might do; given that AA and UA combined serve nearly half of the market, there is enough basis to argue that AM plus DL will provide a roughly similar size to AA and UA.

DL does say that the LCCs both from Mexico and the US will expand but there is no legal basis for arguing for what DL wants based on possible but unconfirmed market specifics.

 

[topDawg]

 
The truth hurts, IAH and DFW and LAX are better hubs to Mexico than SLC, MSP, DTW, ATL, no matter how much you try to spin and deflect.
 
And speaking of NY, remind us again how DLs transcon fares out of JFK stack up?
What? 
That doesn't fit your narrative.
OK, cool story bro!
 

uh.... 
 
I don't get the link to Mexico..... 

 

[eolesen]

Maybe it's because Ben played Arturo Mendez of the Spanish Language News Team in Anchorman 1?...

 

[WorldTraveler]

and I doubt if Arturo is as confused as a certain flyer is about the relationship between average fares and total revenue.

He can harp on DL's lower average fares on the transcons all he wants but DL's revenue is growing. It is hardly a badge of honor to have your average fare shrinking but be reducing revenues in the largest market in the US.

and given that every other carrier saw their average fares go up even though they added capacity that AA cut, it says very clearly that AA was the carrier that was discounting too aggressively in order to fill seats.

And since DL is adding even more capacity later this year, DL's share of the JFK transcons market will continue to go up and I strongly suspect that so will its revenues - while AA's will continue to decline.

The very same thing will happen with Mexico as has happened in the JFK transcons and to LHR; when a viable competitor gains enough size in the market via its own internal growth and/or a JV, the share comes out of the top carriers in the market.

DL will be a stronger carrier to/from Mexico and DL's growth along with AM's will come at the expense of AA and UA who do not have as many options to grow its revenue as DL does.

 

[MAH4546]

AA is hubbed in six of the most important U.S.-Mexico markets. AA is the single largest airline between the U.S. and Mexico. AA is using its market leading position in Los Angeles to further expand in Mexico. Recent ads like MIAMTY and LAXGDL make it blatantly obvious AA has room to expand in Mexico.

 

[WorldTraveler]

I don't think anyone doubts that AA and UA both will take advantage of Open Skies to add further flights.

AM and DL are pursuing a joint venture which likely has more growth potential not just between the US and Mexico but also across AM and DL's combined networks.

DL made a point in the application that LAX and JFK will be major airports for cooperation including combined operations for AM and DL.

 

[commavia]

Perhaps not.  Application put on ice due to insufficient supporting information and the lack of U.S.-Mexico Open Skies.  Oops.

 

[FWAAA]

D'oh!
 
The DoT simply doesn't grasp the severity of Delta's disadvantaged position in the US-Mexico market.   

 

[WorldTraveler]

the Mexican General Director of Civil Aviation wrote:

"Accordingly, the United Mexican States delegation strongly believes that the resulting
advantages of the Agreement will only be met if the government of the United States of America
assures it will undertake all necessary endeavors to grant access to the Mexican airlines to a
beneficial anti-trust regime. ·
For all these reasons and in order to secure the successful implementation of the Agreement,
the Mexican delegation requests that the government of the _United States of America expedites
the grant1ng of ant1trust 1mmunity to those a1rlines that, within the framework of the Agreement,
submit any application any application to obtain it."

The Mexican government is likely to renounce the agreement if the DOT doesn't eliminate its objections to ATI and joint ventures.

The letter is from Nov 2014, well before DL and AM's application - and it is a joint application.

oh, and how much do you want to bet that Mexico blocks the transfer of AS' LAX-MEX route until the issue is resolved.

The US DOT simply negotiated in bad faith if they knew the Mexicans wanted JVs and they didn't tell them the agreement did not provide it.

Since B6 and WN's ability to expand to Mexico also hangs in the balance, the agreement will be fixed and I doubt if Mexico will have to give much to do so.

 

[MAH4546]

Mexico has no say in the Alaska-American route transfer. Like in the case with Japan, China and other nations, each individual country has autonomy in deciding which of its airlines get the routes. 
 
For example, when the Mexicana authorities for routes like MIA-MEX transferred over to Interjet, the DOT had no say in allocating them. 
 
The new agreement already eliminates restrictions on number of carriers starting January 1st, so no route expansion "hangs in the balance." 

 

[WorldTraveler]

yeah the Mexican government does indeed have a say in who flies into its country.

to believe otherwise is simply naïve.

If the Mexican government believes they were lied to by the DOT as part of the negotiations for the expanded agreement, then they can do whatever they want to do with civil air transport between the US and Mexico.

The Mexican government is not agreeing to a new agreement that doesn't allow joint ventures and antitrust immunity.

and if there is no new agreement, then B6 and WN's expansion into Mexico is put on ice. and if the Mexican government doesn't want to allow any progress on the US side, they can put a stop on everything related to air transportation.

No one who has the least bit of understanding about aviation agreements knows that has indeed happened in the past.

The issue will be resolved and AM and DL will get the right to operate a JV with ATI or the agreement will be cancelled and current operations between the US and Mexico will be frozen or lost.

 

[MAH4546]

No, it doesn't have a say, just like Japan had no say in recent Haneda slot case. But sure, whatever, let's make pretend it does because, Delta. 

 

[WorldTraveler]

if a government wants to prohibit the operation of a carrier into its airspace on a specific route, they can do that.

and the US and Japan have an agreement that both sides agree on.

Mexico clearly had expectations about the new treaty that the US gov't does not intend to grant.

of course in your mind, it's ok for the US gov't to screw another country if it harms an AA competitor or allow AA to maintain its market advantage. AA's int'l MO has long been based around market dominance and the elimination of competition. Very Texas the way AA and WN operate.

 

[eolesen]

Perhaps not.  Application put on ice due to insufficient supporting information and the lack of U.S.-Mexico Open Skies.  Oops.

Yep. DL wanted to play technicalities with the HND dormancy?? Well, DOT's good at that game, too...

It will be interesting to see how soon they act on it, i.e. will they consider it in November for a January implementation, or will they only consider it after January 1?

If it's the latter, that would appear to give other airlines a window of opportunity to establish themselves before AM and DL can legally coordinate.

 

[MAH4546]

Nobody is being screwed over. Transfer of route authorities between private parties is long established. Like how Delta acquired New York-London rights before Open Skies. 
 
 

Yep. DL wanted to play technicalities with the HND dormancy?? Well, DOT's good at that game, too...

It will be interesting to see how soon they act on it, i.e. will they consider it in November for a January implementation, or will they only consider it after January 1?

If it's the latter, that would appear to give other airlines a window of opportunity to establish themselves before AM and DL can legally coordinate.

 
It's neither. The agreement, as written, is not Open Skies per DOT. So in order for the application to be considered, U.S.-Mexico need to agree to full Open Skies.