Tag: AIR

Delta Air Lines and Aeromexico on Friday filed an objection with the U.S. Department of Transportation against DOT’s January decision to “tentatively dismiss” the carrier’s antitrust immunity grant renewal, which has allowed the airlines to operate a joint venture. 

The carriers said that the decision if finalized would punish the partners “and the communities they serve, erode competition in the transborder U.S.-Mexico market, harm U.S.-Mexico consumers and slow economic growth with the largest trading partner of the United States—all with no countervailing benefit to U.S. aviation interests or likely impact on the action of the government of Mexico.”

Delta and Aeromexico since 2015 have operated an antitrust-immune crossborder joint venture, allowing them to jointly set prices on routes between the U.S. and Mexico. DOT last month indicated it planned not to review later this year the grant of antitrust immunity, in part because the agency alleged the Mexican government recently moved all cargo operations from Benito Juarez International Airport to airports outside of Mexico City, and passenger capacity at the airport has been reduced during the past three International Air Transport Association traffic seasons.

Delta and Aeromexico argued that they had no “responsibility or control” over the government’s decision to move cargo operations and reduce capacity at the airport. Those decisions were “to the detriment of both current air carriers and potential new entrants,” according to the filing.

The carriers also noted that should they “unravel” their agreement, nearly two dozen routes between the U.S. and Mexico would be at risk of cancellation, and capacity would be reduced. Without network benefits, they argued, fares on their partner routes would “certainly increase,” jobs on both sides of the border would be lost, the number of tourists between the countries would fall and competition in the market would erode.

After DOT’s Jan. 26 order to show cause, Delta and Aeromexico on Jan. 29 filed a request for additional time for objections and comments. On Feb. 7, the agency issued an order extending the comment period by two weeks, to March 5.

DOT also charged that despite issuing repeated warnings to its Mexican counterparts, the government of Mexico is not adhering to the 2015 U.S.-Mexico Air Transport Agreement, and as a result suspended its review of an application for antitrust immunity by Allegiant Air and Viva Aerobus on July 31, 2023, and will dismiss the Delta-Aeromexico application to renew the grant of ATI. Should the agency issue a final order, Delta and Aeromexico tentatively have until Oct. 26 to unwind their relationship.

On Feb. 9, Delta filed a request urging DOT to engage in continued consultations with the government of Mexico, to begin arbitration with the government under the U.S.-Mexico Air Transport Agreement, and “to impose schedule filing requirements on all Mexican carriers serving the United States and, if necessary, restrictions on their schedules.”

Proceeding on DOT’s current course “would harm consumers and competition, fail to change the [government of Mexico’s] behavior and culminate in an order that suffers from numerous [Administrative Procedure Act] violations,” Delta and Aeromexico argued in Friday’s filing.

American Airlines, however, on Feb. 23 filed a comment in favor of the agency’s decision regarding Delta and Aeromexico, stating that the Open Skies agreement between the U.S. and Mexico is a prerequisite for granting antitrust immunity, and charged “the Mexican government’s continued noncompliance” with that agreement “effectively means that there has not been a functioning open skies agreement between the United States and Mexico, and therefore the department’s main prerequisite for a grant of ATI is absent.”

American in its filing also noted that in 2015, “several airlines raised concerns regarding the lack of a fully functioning open skies agreement between the two countries and the lack of transparency in slot allocation at Benito Juarez International Airport “that unfairly advantaged Aeromexico,” adding that since that time, “the situation has worsened.”

DOT declined further comment.

RELATED: DOT Plans to Terminate Delta-Aeromexico Antitrust Immunity

Ultra-low-cost carrier Lynx Air, based in Canada with a destination map that includes domestic locations as well as those in the United States and Mexico, announced Friday that it would cease operations Feb. 26.

The airline, which launched in April 2022 and in December had been added to the TSA PreCheck program, said that despite substantial growth, ongoing operational improvements, cost reductions and efforts to explore a sale or merger, “the challenges facing the company’s business have become too significant to overcome.”

The carrier canceled flights over the weekend “as we work to bring aircraft, crew and as many passengers as possible home,” according to the carrier. A FAQ page on its website said that passengers affected by a cancellation must contact their credit card provider for a refund, as “Lynx Air will not be able to assist with refunds or accommodations.”

Air Canada on Friday said it would cap fares and add more than 6,000 seats in select markets in response to the Lynx announcement. The fares were available before Feb. 26 for travel through April 2. Air Canada said it would not honor Lynx Air tickets and advised affected customers to consult the Canadian Transportation Agency.

Air Canada also said it planned to add incremental capacity on routes Lynx operated, from each Toronto and Montreal to Cancun, Fort Myers, Orlando, Tampa, Phoenix and Las Vegas between Feb. 25 and March 19. However, “flights are already relatively full and the carrier’s ability to increase capacity further is limited,” according to Air Canada.

Global airfares were up by double-digit percentages year
over year in the fourth quarter, according to FCM’s Global Quarterly Trend
Report. The report, based on FCM’s corporate booking data, showed economy
airfares across 380 city pairs was up $76, or 17 percent, year over year, while
business airfares increased by $246, or 15 percent.

In North America, the largest economy fare increase was the
route between New York’s John F. Kennedy International Airport and Los Angeles
International Airport, up 33 percent. Business fares in North America, however,
were largely down year over year in the fourth quarter. Business fares between
JFK and Toronto registered the only increase, up 11 percent.

FCM said airline global capacity is expected to exceed
pre-pandemic levels this year but that airlines are adding more seats with
fewer flights as a result of “fleet configuration changes and shifts in
schedules to meet demand.” In North America, for example, FCM projects the
number of available seats in the first half of this year will be up 7 percent
compared with the first half of 2019, but the number of flights will be down 7
percent. In Europe, the number of seats will be down 1 percent and flights down
8 percent, according to the report.

In addition to its own booking data, FCM’s report uses
Cirium data in capacity analysis.

On the hotel side, corporate average daily rates in North
America for the fourth quarter were up 9 percent year over year, but they were
up only 1 percent compared with the third quarter, which FCM said is an
indication that rates are stabilizing. In Europe, rates were up 28 percent year
over year but only 2 percent compared with the third quarter.

Other regions showed less stable hotel rate movement. In
Australia and New Zealand, for example, rates were up 19 percent year over year
and 12 percent quarter over quarter. Corporate hotel rates were up 43 percent
year over year in Asia and up 14 percent quarter over quarter.

Car rental rates also are stabilizing, with the global
average daily rate for car rental generally flat over the course of 2023 at
$73, the report indicated. That is $20 higher than the ADR for 2019, however.

The European Commission has approved the merger of Korean Air and Asiana Airlines, Korean Air announced Tuesday. The carrier has secured the approval from 13 of the 14 regulatory authorities required. The remaining entity is the United States.

The EC clearance for the merger is conditional and subject to Korean Air’s compliance with agreed-upon commitments, including divestment of Asiana Airlines’ cargo freighter business and “support to ensure the entry by a new airline on the four overlapping passenger routes between [South] Korea and the European Union,” according to Korean Air.

Japan in late January was the most recent entity to approve the merger.