By David Shepardson
WASHINGTON (Reuters) -Delta Air Lines and Aeromexico on Friday asked a U.S. appeals court to halt a Trump administration order forcing the country to dissolve a joint venture that lets the airlines coordinate scheduling, pricing and capacity for flights between the U.S. and Mexico.
Aeromexico told the 11th Circuit Court of Appeals that it would face significant costs that it could not recover even if a court later upholds the settlement.
In September, the U.S. Department of Transportation ordered an end to the nearly nine-year-old joint venture effective Jan. 1, as part of several actions targeting Mexican aviation, citing competition concerns.
Delta said it would also face losses without a court order delaying the requirement pending a ruling.
The airline said its flight operations “will face serious disruptions” and called the USDOT action “arbitrary and capricious” and unrealistic, and based on “unsubstantiated, irrelevant and speculative reasoning.”
The Atlanta-based airline has already canceled two U.S. flights to Mexico as a result and “may have to cancel even more cross-border flights next summer.”
Delta also argued that USDOT held its joint venture to higher standards than other joint ventures, including United Airlines and ANA
USDOT, which on Friday denied the airline's request to delay the order, did not comment.
Aeromexico said the order requires it to “reroute.”
exist and hire new staff, establish a new brand presence in the US, separate the information technology platforms for US pricing and sales from Delta's.”
In August, USDOT said the joint venture should be terminated due to “continued anticompetitive effects on the markets between the U.S. and Mexico City, which provide an unfair advantage to Delta and Aeromexico.”
The airlines account for approximately 60% of passenger flights from Mexico City Airport to the US. The airport is the fourth largest international gateway to and from the United States.
Aeromexico and Delta said they have a 20% seat share in the U.S.-Mexico market, compared to 21% for American Airlines, arguing that this shows it is a highly competitive market.
USDOT, which is not requiring Delta to sell its 20% equity stake in Aeromexico, has said the company's likely problems include higher fares in some markets, reduced capacity and challenges for U.S. airlines from government intervention.
Delta says up to $800 million in annual consumer benefits could evaporate, two dozen routes could be canceled and smaller planes could replace existing planes if the joint venture were to disappear.
(Reporting by David Shepardson; Editing by Richard Chang and Sam Holmes)
