Trump Admin To End Delta-Aeromexico JV On ‘Unacceptable’ Harm For Consumers

The U.S. Department of Transportation has reportedly ordered Delta Airlines and Aeromexico to scrap their joint venture by Jan. 1 that allows the airlines to coordinate flight schedules and prices in U.S.-Mexico routes.

According to a CNBC report, the transportation department noted that the partnership provides unfair advantages to the airlines in the U.S.-Mexico routes as two predominant competitors and “creates unacceptable actual and potential harm for stakeholders, including consumers.” The Trump administration had already warned earlier this year that it could take such a step to protect passengers.

In a statement, Delta said the order will “cause significant harm to U.S. jobs, communities, and consumers traveling between the U.S. and Mexico,” and the company will speak with Aeromexico to review next steps. According to the report, Aeromexico stated that the carriers will continue to offer flights on each other’s airline, as well as frequent flyer program reciprocity, allowing customers to earn and use miles.

The order will not affect Delta’s 20% equity stake in Aeromexico, valued at $376 million, as of June 30.

Retail sentiment on Stocktwits about Delta was in ‘bullish’ territory at the time of writing.

In an earlier filing, Delta had warned that the partnership sustains nearly 4,000 U.S. jobs and adds more than $310 million to the U.S. economy. It had also cautioned that an end to the joint venture could lead to the disappearance of $800 million in annual consumer benefits and the cancellation of two dozen routes.

According to a Reuters News report, the two airlines account for about 60% of passenger flights from Mexico City Airport to the U.S. In 2024, the Biden administration also considered scrapping the joint venture, which has been in operation since 2016.

According to a Reuters report, the U.S. Transportation Department also alleged that Mexico was continuing along “a path of market intervention and distortion that adversely affects competition in the U.S.-Mexico air services market" and accused the southern neighbor of maintaining a slot allocation regime that does not meet international standards, thereby favoring Aeromexico.

The U.S. complaints stem from a move by the Mexican government to reduce slot awards to U.S. carriers and restrict cargo flight access at Mexico City’s Benito Juarez International Airport to reduce congestion and move flights to a newly built airport outside of Mexico City.

Delta Air Lines’ stock has fallen 3.1% this year.

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