BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Joint Application of 

DELTA AIR LINES, INC. and

AEROVIAS DE MEXICO, S.A. DE C.V.

Under 49 U.S.C. §§ 41308 and 41309

for Approval of and Antitrust Immunity 

for Alliance Agreements

)

)

)

)

)

)

)

)

)

Docket DOT-OST-2015-

JOINT APPLICATION FOR APPROVAL OF AND ANTITRUST IMMUNITY

FOR ALLIANCE AGREEMENTS

Communications with respect to this document should be sent to:

Anko van der Werff

Chief Revenue Officer

David Lamoyi

General Counsel

Aerovias de Mexico, S.A. de C.V.

Paseo de la Reforma 445 Col. 

Cuauhtemoc, 06500, Mexico City, D.F., 

Mexico

Glen Hauenstein

Executive Vice President 

 & Chief Revenue Officer

DELTA AIR LINES, INC.

1030 Delta Boulevard

Atlanta, Georgia 30320

Robert E. Cohn

Patrick R. Rizzi

HOGAN LOVELLS US LLP

Columbia Square

555 Thirteenth Street, NW

Washington, DC 20004

Tel. 202 637 4999/5659

Counsel for

AEROVIAS DE MEXICO, S.A. DE C.V

Ben Hirst

Executive Vice President 

 & Chief Legal Officer

Alexander Van der Bellen

Managing Director, Regulatory and

International & Associate General Counsel

Christopher Walker, Regional Director –

Regulatory and International Affairs

DELTA AIR LINES, INC.

1212 New York Avenue, NW Suite 200

Washington, DC 20005 

Tel. 202-842-4184

March 31, 2015
Table of Contents

I. Introduction..........................................................................................................1

II. Executive Summary.............................................................................................4

III. Description of the Agreements.............................................................................6

A. JCA Agreement........................................................................................7

1. Network Working Group ...............................................................9

2. Revenue Management and Pricing Working Group ......................9

3. Marketing and E-Commerce Working Group ..............................10

4. Operations Working Group .........................................................11

5. Finance Working Group..............................................................11

B. Implementing Agreements .....................................................................11

IV. The Application Is Consistent with the Department’s Legal Standards for 

Granting Immunity. ............................................................................................11

V. A Grant of Immunity Is Required to Produce Important Public Benefits..............12

A. The Delta/Aeromexico JCA Will Enable the Parties to Provide 

Substantial Consumer Benefits through New Services and 

Increased Competition. ..........................................................................15

1. The Proposed Alliance Will Provide Consumers With the 

Benefit of an Expanded Joint Network. .......................................15

2. Upgauging to Larger and More Efficient Aircraft. ........................16

3. A New JCA Hub at Los Angeles Serving Transborder 

routes. ........................................................................................18

4. Increased Frequency and Improved Schedule at Los 

Angeles and New York. ..............................................................20

5. Improved Service Between the U.S. and Mexico Regional 

Cities. .........................................................................................20

6. More Effective Sales Presence on Both Sides of the 

Border. .......................................................................................21

7. Airport Co-location and Streamlined Service Will Improve 

the Customer Experience. ..........................................................21

B. The JCA’s Substantial Consumer Benefits that Cannot Be 

Achieved without Antitrust Immunity.......................................................22
VI. U.S.-Canada Experience Confirms The Compelling Benefits of 

Transborder Joint Alliances. ..............................................................................24

VII. The Proposed Alliance Will Improve Competition and Consumer Choice 

on U.S.-Mexico Routes and Will Not Reduce Competition in Any Relevant 

Market. ..............................................................................................................25

A. The Proposed JCA Will Enhance Competition. ......................................26

1. United States-Mexico..................................................................26

2. Overlap City-Pairs ......................................................................27

B. Substantial New Entry Will Be Enabled. .................................................29

VIII. Granting ATI is Consistent With Mexico’s Expectations in Entering Into a 

Liberalized Transborder Agreement...................................................................30

IX. The Joint Applicants Will Not Implement the Alliance Agreements without 

Antitrust Immunity..............................................................................................32

X. Mexico Has Established Procedures for Antitrust Approval of Airline 

Alliances. ...........................................................................................................32

XI. Slots at Mexico City ...........................................................................................34

XII. Conclusion.........................................................................................................35
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Joint Application of 

DELTA AIR LINES, INC. and

AEROVIAS DE MEXICO, S.A. DE C.V.

Under 49 U.S.C. §§ 41308 and 41309

for Approval of and Antitrust Immunity 

for Alliance Agreements

)

)

)

)

)

)

)

)

)

Docket DOT-OST-2015-

JOINT APPLICATION FOR APPROVAL OF AND ANTITRUST IMMUNITY

FOR ALLIANCE AGREEMENTS

I. Introduction

Delta and Aeromexico1 have entered into a comprehensive JCA

Agreement2

(JCA) to coordinate their respective passenger services on routes between 

the United States and Mexico (the “Proposed Alliance”). The Proposed Alliance will be a 

more effective competitor on U.S.-Mexico transborder routes by linking the combined 

networks of Delta and Aeromexico to create a third viable network competitor on U.S.-

Mexico routes. 

The Proposed Alliance will create a strong new competitor that is better than the 

sum of its parts. Delta’s and Aeromexico’s respective assets complement each other's: 

Aeromexico’s Mexico City, Monterrey and Guadalajara hubs provide Delta with the 

network access it needs to interior Mexico in order to compete with the Texas hubs of 

1 Common names are used throughout. Delta and Aeromexico are sometimes 

referred to herein as the “JCA Parties.” 

2 Hereinafter the “JCA Agreement” or “JCA.”

 
Joint Application

Page 2

American and United. For its part, Delta provides Aeromexico with a broad North 

American network and strong marketing and distribution presence throughout the U.S. 

American and United are the largest U.S.-Mexico competitors with 25 and 22

percent U.S.-Mexico market shares, respectively. Exhibit JA-1. Both of the leading U.S. 

carriers have broad network coverage into Mexico from their Texas hubs. Aeromexico 

and Delta rank as a distant 3rd and 4th place competitors with 14 and 11 percent market 

shares, respectively.3

 Id. Neither Delta nor Aeromexico individually has the ability to 

offer a single carrier network of comparable scope and scale to compete with United and 

American. Id.

Delta and Aeromexico applaud the landmark bilateral air services agreement 

initialed by the U.S. Government and Mexico on November 21, 2014. Once entered into 

force the new agreement will provide for full liberalization on U.S.-Mexico transborder 

routes, removing previous designation limitations which restricted carriers’ ability to 

introduce beneficial new services and limited new entry and competition. This 

agreement provides a sound framework to support the proposed transborder JCA

agreement between Delta and Aeromexico – and the substantial increase in new 

transborder network service and competition it will produce.

Delta and Aeromexico have extensive experience as partners and have been 

codesharing for more than 20 years and were founding members of the SkyTeam 

Alliance. However, because of antitrust risk and commercial independence the carriers 

are competitors, and they are unwilling to grant open access to each other’s networks, 

resulting in sub-optimal inventory access and fewer and less attractive options for 

consumers, slower growth of service, and constrained capacity on transborder routes. 

By collaborating under a JCA, the parties can create bank structures and connectivity to 

3 OAG Seat Shares, March 2015.

 
Joint Application

Page 3

better serve network passengers. Antitrust immunity is essential for each carrier to 

effectively plug into the respective hub networks on both sides of the border. 

Accordingly, Delta and Aeromexico4 hereby apply for antitrust immunity for the 

Alliance Agreements (described below) so that Delta and Aeromexico can implement 

their metal neutral JCA. The Joint Applicants seek limited transborder immunity which 

covers the commercially sensitive activities contemplated by the JCA. Antitrust immunity 

for the Alliance Agreements is necessary for Delta and Aeromexico to achieve the 

synergies and public benefits that will flow from the JCA. 

This Joint Application is made pursuant to 49 U.S.C. §§ 41308 and 41309. The 

Delta/Aeromexico Alliance will create “metal neutrality” between Delta and Aeromexico

on passenger routes between the United States and Mexico. The JCA includes all 

nonstop transborder routes operated by Delta and/or Aeromexico, as well as behind and 

beyond connecting flights within the respective countries. A number of new and updated

commercial agreements will be entered into as part of the JCA that provide for bilateral 

codesharing, lounge access, and reciprocal frequent flyer programs (“FFP”). 

Collectively, these are the Alliance Agreements for which antitrust immunity is sought.5

 

The alliance that would be formed by these agreements (the “Proposed Alliance”) 

meets the DOT’s standard for approval of and granting of antitrust immunity because it 

will produce significant public benefits, and will not substantially reduce or eliminate 

competition in any relevant market. 

4 Hereinafter the “Joint Applicants.” The Joint Applicants request that the grant of 

antitrust immunity (“ATI”) extend to their majority-owned corporate affiliates. See 2009 

Star ATI, DOT Order 2009-7-10, at 27, Ordering Paragraph 1; 2011 Star ATI, DOT Order 

2011-11-16, at 7 & 11, Ordering Paragraph 1 (granting ATI to the “majority-owned 

affiliates” of the Joint Applicants).

5 Appendix A contains an abstract of the JCA. 

 
Joint Application

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II. Executive Summary

Delta and Aeromexico seek to form a highly coordinated, immunized alliance for 

U.S.-Mexico service that will enable the JCA Parties to compete more effectively on 

transborder routes. Delta and Aeromexico respectfully submit that the Proposed 

Alliance meets the Department’s public interest standard for approval and is consistent 

with previous grants of immunity for similar alliance arrangements. The recently initialed

transborder agreement between the U.S. and Mexico creates the foundation for Mexican

and U.S. carriers to forge closer ties with each other. 

The Proposed Alliance will deliver important public benefits. By joining together, 

Delta and Aeromexico will create a better network and offer a better product -- and will 

thus be able to compete more effectively than either carrier can on its own, or would 

ever be able to, in the absence of the JCA. Specifically:

• Together, Delta and Aeromexico will have the ability to operate a seamless and 

integrated network linking nearly 11,000 U.S.-Mexico city-pairs. Exhibit JA-2.

• Antitrust immunity is essential to optimize connectivity and revenue management 

over and maximize joint selling activities with respect to the hub networks of both 

carriers, which have been developed on each side of the border. In the absence 

of ATI, each carrier acts in its own self interest, whereas acting together the 

carriers can offer a more attractive and competitive joint product to consumers

• Delta and Aeromexico will be able to leverage schedule and aircraft efficiencies

to launch additional transborder flights during slower demand hours. For 

example, instead of having a Delta or Aeromexico aircraft sit on the ground at 

West Coast hubs or focus cities until the next morning, the aircraft could 

efficiently be used to fund additional transborder turnaround flights. 

• Delta forecasts up to 14 new ATI enabled routes over the next 5 years and up to 

39 additional daily departures. Exhibit JA-3. Neither carrier acting alone could 

achieve these benefits, but close cooperation, access to each other’s domestic 

networks, and relying on each other’s point of sale marketing and distribution 

expertise, will enable important new service and competitive benefits . 

• Among the three major U.S. Network carriers, Delta is the only carrier without a 

Texas hub. Consequently, unlike American and United, Delta does not have the 

ability to efficiently reach important and rapidly growing secondary cities in 

Mexico with short-range, smaller-gauge equipment. Establishing immunized hubs
Joint Application

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with Aeromexico in Mexico City, Monterrey and Guadalajara will enhance service 

and competition.

• An immunized Delta/Aeromexico alliance will create a third network player with 

sufficient critical mass to challenge American and United. American and United 

are effectively tied as the leading carriers in the market with 25 and 22 percent

market shares, respectively. Aeromexico and Delta trail distantly with 14 and 11

percent shares. 

• Working together Aeromexico and Delta plan to develop Los Angeles into an 

important JCA hub covering the top 10 West Coast - Mexico markets. Delta’s 

growing hub at LAX, combined with Aeromexico’s marketing presence south of 

the border creates these important new JCA-enabled routes. 

• Delta and Aeromexico will optimize their schedules to improve service and 

consumer choice on the largest and most important U.S.-Mexico routes: New 

York-MEX and Los Angeles-MEX. Working together the carriers will add service 

and avoid overlapping “wingtip” flights to create an improved, high-quality, highfrequency product.

• Aeromexico is Mexico’s only remaining network carrier providing service to cities 

large and small across the country. By entering into a JCA with Delta, 

Aeromexico becomes more durable competitor to new entrant carriers that are 

poised to enter large and important U.S.-Mexico routes. 

• Delta and Aeromexico will create a metal-neutral codeshare network covering all 

flights between the United States and Mexico. The revenue management 

techniques employed by the JCA are designed to ensure full access of each 

party’s inventory to the other, and will eliminate “double marginalization” markups 

because both carriers share in the revenue of the entire journey.

• The JCA enables Delta and Aeromexico to have a more effective and efficient 

joint sales force, increasing their ability to compete more effectively for corporate 

accounts and agency business. 

• The JCA will create new efficiencies that improve the customer experience and 

lower costs, such as co-locating airport operations when and where possible. In 

particular Delta and Aeromexico are committed to establishing a new colocation

initiative at LAX and JFK, which the carriers view as important to realizing the 

benefits of the JCA. 

The Proposed Alliance is consistent with the liberalized U.S.-Mexico transborder 

agreement and U.S. aviation policy, which has long recognized the formation of alliances 

as an important procompetitive tool. The JCA will produce important efficiencies, and 

the open transborder agreement provides a fully competitive environment that ensures 

those benefits will be passed along to consumers. The Department approved both the 
Joint Application

Page 6

United/Air Canada and American/Canadian immunized alliances under a similar open 

transborder agreement with Canada. Order 97-9-21; Order 96-7-21. Implementation of 

the United/Air Canada immunized alliance has produced major service and capacity 

increases in the U.S.-Canada transborder market, and similar - if not greater - benefits 

can be expected on U.S.-Mexico transborder routes.

Delta and Aeromexico require antitrust immunity to deliver the significant public 

benefits of their Proposed Alliance. The JCA Parties cannot share profits, scheduling, 

network and pricing plans or undertake many of the other joint activities contemplated by 

the JCA and the Alliance Agreements in the absence of antitrust immunity. No other 

similar alliance has been willing to proceed with its agreements in the absence of 

immunity from the Department. The Joint Applicants respectfully submit that the Alliance 

Agreements meet the Department’s public interest standard for approval and are 

consistent with a long line of decisions that conferred antitrust immunity upon similar 

alliance arrangements.

III. Description of the Agreements

The JCA Parties intend to form an integrated alliance. A grant of antitrust 

immunity by the Department, coupled with the approval of such a “concentration” by

Mexico, will enable the JCA Parties to produce new and more effective competition, new 

service and other consumer benefits, and significant efficiencies – all objectives for 

which the DOT has granted antitrust immunity.

There can be no doubt that the JCA Parties are fully committed to achieving 

these objectives. In fact, Delta has acquired a 4.17 percent equity stake in Aeromexico. 

Delta’s interests clearly lie in a long-term commitment to the success of Aeromexico and 

the JCA. Delta’s investment in Aeromexico creates an alignment of financial incentives 

that will ensure that the benefits of the JCA are realized.
Joint Application

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The JCA is consistent with the alliance agreements that the Department has 

approved and immunized in other recent ATI cases.6

 The JCA is detailed and provides 

for a great degree of cooperation, which helps ensure that the immunized JCA will 

produce substantial consumer benefits.

A. JCA Agreement

The JCA between Delta and Aeromexico covers all nonstop flights operated by 

Delta and Aeromexico between the United States and Mexico, as well as the JCA 

Parties’ behind and beyond flights within the U.S. and Mexico that connect to 

transborder services. The JCA creates metal neutrality between the two carriers and 

provides a detailed blueprint for how the JCA Parties will implement and coordinate their 

operations on Proposed Alliance routes. The JCA is structured to ensure that each 

carrier is motivated to maximize the profitability of the Proposed Alliance as a whole. 

The integrated commercial activities contemplated by the JCA create significant

efficiencies that can be implemented only with antitrust immunity. Integrated commercial 

activities provided for in the JCA include:

• 50-50 sharing of incremental contribution generated by the JCA above 

baseline performance, together with 20 percent sharing of incremental

beyond and behind revenue, ensuring that the JCA Parties are fully 

incentivized to achieve shared goals and efficiencies.

• Network and scheduling decisions relative to the JCA Parties’ operations 

on JCA routes will be planned for and made jointly to optimize the 

Delta/Aeromexico competitive offering against rival carriers. This will 

allow the JCA Parties to optimize frequency and capacity and to promote 

connectivity between the JCA Parties’ operations.

• Metal neutrality, which ensures that the JCA Parties will implement metal 

neutral sales and distribution policies and programs with respect to 

service on JCA routes without preference to a JCA Party’s own operated 

flights.

6 See, e.g., Delta/Virgin Atlantic DOT Order 2013-9-14, DOT Order American 

Airlines/British Airways, DOT Order 2010-7-8, at 22; SkyTeam II ATI, DOT Order 2008-

5-32, at 4; U.S.-Japan Alliance Case, DOT Order 2010-11-10, at 3.

 
Joint Application

Page 8

• Reciprocal code sharing on all U.S.-Mexico services and beyond routes 

within the respective countries. Reciprocal codesharing will entail 

seamless interactive inventory availability and favorable special prorate 

terms, which will eliminate double-marginalization pricing mark-ups. 

• Joint sales and marketing Cooperation, which will maximize local point of 

sales expertise and allow the Parties to present a single sales face to 

customers. 

• Complementary product development and service enhancements.

• Airport co-location opportunities and joint purchasing strategies. 

The JCA Parties are presenting the confidential, detailed JCA for the 

Department’s consideration. Delta and Aeromexico are ready to move quickly and

anticipate implementing the JCA promptly after receiving regulatory approvals, with the

first joint network plan implemented in 90 days after implementation of the JCA. The JCA 

provides the Department with certainty that the substantial consumer benefits and 

efficiencies of the Proposed Alliance will be immediate and proximate to the grant of ATI 

approval.7

The Proposed Alliance will be managed by a JCA Steering Committee that will 

meet initially four times per year and consist of two senior management representatives 

of each JCA Party. The day-to-day commercial and integration activities of the JCA will 

be managed by several of working groups including: (1) network, (2) revenue 

management, (3) marketing and e-commerce, (4) sales, (5) finance, and (6) operations. 

7 In recent years, the Department has required applicants for ATI to demonstrate 

that they have concrete plans to utilize this authority, and that this authority can yield 

immediate and substantial benefits. See, e.g., Delta/Virgin Blue, DOT Order 2011-6-9. 

Delta and Aeromexico are well-prepared to make this showing. Although the carriers 

only recently agreed to form their JCA, they have prior experience as partners, having 

maintained an extensive U.S.-Mexico codeshare arrangement since 1994. Moreover, 

Delta and Aeromexico have compatible processes and systems. Aeromexico is hosted 

in a full service GDS and maintains a full suite of systems for handling codesharing and 

FFP reciprocity, because it cooperates with other major international carriers. The JCA 

Parties are highly incentivized to move quickly to deliver new services and consumer 

benefits, and to build their competitive presence in the U.S.-Mexico marketplace.

 
Joint Application

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1. Network Working Group

The Network Working Group will develop and implement the jointly agreed 

network optimization plan, which will seek to assign the most efficient aircraft from the 

JCA Parties’ combined fleets to each route. 

The JCA Parties will move rapidly to realize the substantial public benefits of the 

joint network plan soon after ATI approval. The network changes will be implemented 

within 90 days following implementation of the JCA.

 This period allows for advance 

publication and selling of the new schedule and the necessary lead-time for making 

operational changes.

2. Revenue Management and Pricing Working Group

The Revenue Management and Pricing Working Group will manage the 

coordinated pricing and revenue management functions of the JCA and the delegation of 

responsibility for implementing the JCA’s pricing strategies and activities, which is 

intended to maximize each carrier’s point of sale expertise. The JCA Parties intend to 

achieve a high degree of integration and cooperation of their respective revenue 

management systems and processes with respect to itineraries over JCA routes and 

relevant beyond routes in order to maximize profits. The JCA Parties will manage their 

own flights with respect to revenue management activities; however, the JCA Parties’ 

revenue management strategies and policies with respect to such routes will be aligned.

Reciprocal codesharing is already supported by the JCA Parties’ GDS platforms, 

and the JCA Parties are committed to putting additional systems and technology in place 

to support additional revenue management coordination following implementation of the 

JCA. Alignment and cooperation of the JCA Parties’ inventory management systems 

and processes will be accomplished through: (1) harmonization of booking classes, (2) 

seamless interactive inventory availability, (3) bid price exchange, (4) married segment 
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logic and journey controls, (5) if technically and economically feasible, sourcing of each 

other’s forecasting data input for each JCA Party’s unique origin/destination between the 

United States and Mexico to feed each other’s revenue management system, and (6) 

harmonization of passenger-related service methods and procedures to the extent 

practicable (such as passenger protection and waitlist priorities). 

3. Marketing and E-Commerce Working Group

The Marketing and E-Commerce Working Group will be responsible for creating 

a highly coordinated sales function for the JCA, developing full reciprocity between the 

JCA Parties’ loyalty programs, e-commerce functionality, and facilitating reciprocal 

access to premium lounges.

Under the JCA, the JCA Parties have committed to implement a “metal neutral” 

sales policy under which each JCA Party will implement sales and distribution programs 

and policies with respect to JCA routes without preference to its own flights on routes 

operated by the other JCA Party. Upon implementation of the JCA, the JCA Parties will 

seek to present a common “face” to the customer using seamless tools, processes and 

support.

The JCA sales teams will coordinate with the JCA pricing teams with respect to 

establishing discount policies for corporate and agency accounts. The JCA Parties will 

implement common strategies and tactics for selling JCA products and services and will 

maintain a coordinated approach to JCA accounts and coordinated sales 

communications in order to minimize conflict and maximize cooperation of sales 

activities.

Although Delta and Aeromexico will maintain separate frequent flyer programs, 

the JCA Parties will implement and maintain full reciprocity between their respective 

loyalty programs. In addition, the JCA Parties will provide reciprocal premium customer 
Joint Application

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handling services, including priority airport check-in, baggage handling and excess 

baggage allowances to elite customers of each JCA Party, as well as maintain reciprocal 

arrangements between their respective airport lounge programs for elite customers.

4. Operations Working Group

The Operations Working Group will facilitate seamless passenger connections, 

baggage transfer, check-in and harmonization of customer service policies. The JCA 

Parties agree to coordinate their schedules and operations with respect to JCA routes 

and related beyond routes in order to maximize connections between the JCA Parties’ 

flights and to reduce minimum connection times. The JCA Parties will also pursue colocation opportunities at airports where flights are operated on JCA routes at common 

airports. The JCA Parties will seek to address any customer service “seams” that may 

exist or arise in such processes and procedures.

5. Finance Working Group

The Finance Working Group monitors and reports on JCA financial performance 

and determines the financial settlement between the Parties. 

B. Implementing Agreements

The JCA will be accompanied by a number of new and updated alliance 

implementing agreements including a Codeshare Agreement, a Special Prorate 

Agreement, a Lounge Agreement, and an FFP Agreement.

IV. The Application Is Consistent with the Department’s Legal Standards for 

Granting Immunity.

In considering applications for antitrust immunity, the Department engages in a 

two-part analysis: a “competitive analysis” and a “public benefits” analysis.8

 Under 49 

U.S.C. § 41309(b) the Department will “approve an agreement . . . when the Secretary 

8 See 2011 Star ATI, DOT Order 2011-11-16, at 5; American Airlines/British 

Airways, DOT Order 2010-7-8, at 7-8.

 
Joint Application

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finds it is not adverse to the public interest and is not in violation of this Part.” If the 

Department approves an agreement under 49 U.S.C. § 41309, the Department has the 

discretion to grant the transaction antitrust immunity under 49 U.S.C. § 41308 “provided 

that [the Department determines] the exemption is required by the public interest.”9

 

“While the public interest determination under both §§ 41309(b) and 41308(b) entails a 

comparison of anti-competitive effects and public benefits, the standard in section 

§ 41308(b) . . . is higher.”10

The Department’s established policy is to approve and grant immunity for intercarrier agreements if:

(1) the agreements do not eliminate or substantially reduce 

competition and are not adverse to the public interest; and

(2) a grant of immunity is required by the public interest and for the 

parties to proceed with the transaction.11

For the reasons discussed below, the Joint Applicants respectfully submit that 

the proposed Alliance Agreements meet these criteria. 

V. A Grant of Immunity Is Required to Produce Important Public Benefits.

The Proposed Alliance will produce substantial public benefits by providing 

enhanced service and competition in the U.S.-Mexico transborder market. American 

and United are the two leading competitors with 25 and 22 percent market shares, 

whereas Delta and Aeromexico trail as distant 3rd and 4th place competitors with 11 and 

14 percent shares, respectively. Exhibit JA-1. American and United also enjoy the 

important structural advantage of large hubs in Texas, giving them the ability to 

9

 2011 Star ATI, DOT Order 2011-11-16, at 5; see also 49 U.S.C. § 41308.

10 2011 Star ATI, DOT Order 2011-11-16, at 5; American Airlines/British Airways, 

DOT Order 2010-7-8, at 8.

11 American Airlines/British Airways, DOT Order 2010-7-8, at 8.

 
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economically provide broad network coverage into Mexico, serving both large and small 

markets and providing greater frequency.

 A Delta/Aeromexico JCA creates a third network competitor of roughly equal 

size to American and United that will compete more effectively by providing new and 

enhanced services. Aeromexico’s hubs at Mexico City, Monterrey and Guadalajara

provide broad coverage of interior Mexico, enabling the Proposed Alliance to offer a 

transborder network that rivals that of the leading competitors. Working together the 

JCA Parties will be able to introduce new nonstop services, that would not otherwise be 

achievable as two-stand alone competitors, create a new hub at Los Angeles serving 

Mexico, increase service on hub-to-hub pipeline routes, and offer greater frequencies on 

the largest and most important transborder routes: New York-MEX and Los AngelesMEX. As a result of the new fully liberal transborder aviation agreement, competition will 

intensify as new entry will be enabled on routes that are currently restricted. Taken 

together, these new services and the competition they bring to the market will produce 

significant consumer welfare benefits.

Antitrust immunity for the Alliance Agreements is necessary to achieve these 

benefits. The JCA will allow Delta and Aeromexico to optimize flight schedules, share 

profits and losses, engage in joint pricing and revenue management in JCA markets, 

and launch joint sales and marketing initiatives. These and other joint activities will allow 

the JCA Parties to achieve integrative efficiencies and expand their joint network; but in 

the absence of immunity these activities would expose the Joint Applicants to 

unacceptable antitrust risk. 
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The Department has previously found12 that integrated airline alliances, such as 

the JCA proposed here, produce extensive consumer benefits: “Antitrust immunity is 

well suited to enable carriers to achieve merger-like efficiencies and deliver benefits that 

would not otherwise be possible.”13 For example, the Department has noted the 

beneficial impact of immunized alliances on service levels, fares, and costs:

“[W]e tentatively find that the following public benefits are 

likely [from an immunized oneworld alliance]: (1) more 

options for travelers in numerous transatlantic city pairs, 

based on the applicants’ ability . . . to achieve fare 

combinability; (2) lower fares resulting from the reduction in 

double marginalization on multi-segment itineraries; (3) 

volume discounting . . .; (4) expanded access to 

discounted fares resulting from coordinated inventory; (5) 

reduced costs through shared sales, marketing, 

distribution, procurement, . . .”14

The Proposed Alliance creates even greater opportunity and consumer benefits. Under 

a metal neutral JCA the parties are fully incentivized to flow traffic to one another and 

capitalize on each other’s strengths to take advantage of new market opportunities. By 

sharing contribution results, the parties have the incentive to price jointly. This is borne 

out by the fact that the parties are obligated to provide better access to each other’s

inventory and more favorable prorates when the JCA begins. 

12 See International Aviation Developments: Transatlantic Deregulation, The Alliance 

Network Effect, U.S. Department of Transportation, Office of the Secretary (Oct. 2000), 

at 5 (“DOT Second Report”), at 2-3, 5-6, 10; see also, e.g., SkyTeam II ATI, DOT Order 

2008-5-32; ANA/CO/UA AA/JAL, DOT Order 2010-10-4; Continental/Star Alliance, DOT 

Order 2009-4-5; American Airlines/British Airways, DOT Order 2010-2-8; Delta/Virgin 

Australia/Pacific Blue, DOT Order 2011-6-9; 9-way Star Alliance ATI, DOT Order 2006-

12-17; American/Lan Airlines/Lan Peru, DOT Order 2005-10-8; America West/Royal 

Jordanian, DOT Order 2005-1-23; American/SN Brussels, DOT Order 2004-4-10; 

United/Asiana, DOT Order 2003-5-18; American/Swiss, DOT Order 2002-11-12; 

American Finnair, DOT Order 2002-7-39; Delta/Korean, DOT Order 2002-6-18; 

United/Bmi, DOT Order 2002-4-4; Delta/Air France/Alitalia/Czech, DOT Order 2002-1-6; 

Continental/COPA, DOT Order 2001-5-1; United/Austrian, DOT Order 2001-1-19; 

American/Lan Chile, DOT Order 1999-9-9.

13 SkyTeam II ATI, DOT Order 2008-4-17, at 15. 

14 American Airlines/British Airways, DOT Order 2010-2-8, at 30.

 
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Because transborder routes can be served with narrowbody aircraft, the JCA 

Parties can move even more quickly to take advantage of these opportunities than is 

possible with transoceanic alliances requiring widebody aircraft. The larger number and 

gauge types of narrowbody aircraft will allow the JCA Parties to quickly increase 

capacity to match demand. Both carriers operate large hubs with multiple connecting 

banks, providing the opportunity for increased frequencies on critical network pipeline 

routes. Additional point-to-point services are also possible. And, new schedule 

efficiencies are created allowing for increased service and improved aircraft utilization. 

For all of these reasons, the cooperation between Delta and Aeromexico will generate 

important efficiencies and public benefits, discussed below.

A. The Delta/Aeromexico JCA Will Enable the Parties to Provide 

Substantial Consumer Benefits through New Services and Increased 

Competition.

1. The Proposed Alliance Will Provide Consumers With the 

Benefit of an Expanded Joint Network.

The JCA will enable Delta and Aeromexico to join their networks to provide 

customers with more service options and to compete more effectively with the broad 

networks currently offered by American and United. While Delta and Aeromexico 

currently codeshare on transborder routes, the network is hampered by the lack of metal 

neutrality and incentives to cooperate. Because Delta and Aeromexico are competitors, 

neither carrier is willing to offer full network and inventory access to the other. 

Under the JCA, Delta and Aeromexico will be able to adjust their schedules and 

inventory access to enhance connections with Delta’s North American services beyond 

Aeromexico’s U.S. gateways – improving the distribution and penetration of 

Aeromexico’s product in the U.S. and North American marketplace. Notably, Delta 

operates hubs at the critical JFK and LAX gateways which have substantial service by 
Joint Application

Page 16

AeroMexico. Delta’s other U.S. hubs including Atlanta, Salt Lake City, Detroit, Seattle 

and Minneapolis provide a platform for future JCA services. 

Similarly, Delta will be able to reach points in interior Mexico served by 

Aeromexico over its hubs at Mexico City, Monterrey and Guadalajara which are 

impractical for Delta to serve on its own. For example, it is 1330 miles from Delta’s 

primary hub at Atlanta to Mexico City. By comparison, it is only 763 miles from Houston 

to Mexico, enabling United to operate a much larger network into Mexico. The creation 

of a new immunized joint network will afford customers more competitive service 

alternatives. 

2. Upgauging to Larger and More Efficient Aircraft. 

Delta and Aeromexico anticipate that improved schedules and network 

connectivity will lead to increased traffic flowing across the joint network. Both carriers 

have a variety of narrowbody aircraft in their fleets and the capability to substantially 
Joint Application

Page 17

increase capacity by upgauging to larger aircraft. The following routes have been 

identified as likely candidates for upgauging:

Route Baseline 

Gauge

Future 

Gauge % Change

SLCPVR 95 150 59%

SLCSJD 101 150 49%

MIAMTY 76 99 30%

SLCGDL 76 99 30%

IAHMEX 99 123 25%

ATLCUN 149 180 21%

MIAMEX 133 160 20%

MCOMEX 134 160 20%

DTWCUN 153 180 18%

LAXMTY 76 88 15%

LAXPVR 131 150 15%

DTWMEX 126 143 13%

ORDMEX 141 160 13%

JFKCUN 160 180 13%

DTWMTY 80 90 12%

LAXMEX 144 160 11%

SFOMEX 145 160 11%

ATLMEX 124 134 8%

LASMEX 150 160 7%

ATLPVR 150 160 7%

SLCCUN 150 160 7%

Not only will capacity increase across the transborder network, but important 

efficiency gains will be realized. For example, improved JCA traffic flows enabled by 

increasing from a smaller A-319 to a larger B737-800 will reduce costs by 12%, and 

upgauging from a B-737-800 to B737-900 will result in a further efficiency gain of 8%. 

Exhibit JA-4. The abundant upgauging opportunities identified above -- combined with 

flexibility in the Delta and Aeromexico fleets -- will lower costs, enhancing competition 

and benefits to consumers. 
Joint Application

Page 18

3. A New JCA Hub at Los Angeles Serving Transborder routes. 

With over 1,500,000 O&D passengers, Los Angeles is the largest U.S.-Mexico 

transborder market. And, with an ethnic population of 5 million, it has the largest 

Mexican population of any city after Mexico City. The traveling public would be wellserved by additional transborder service at Los Angeles. 

Under the JCA, Delta and Aeromexico anticipate forming a cohesive hub at Los 

Angeles serving the 10 largest West Coast-Mexico markets. In addition to launching 

new routes, frequency and gauge on existing routes will be expanded. JA-3. Neither 

Delta nor Aeromexico acting alone could implement such expansion at Los Angeles. 

Delta has been growing Los Angeles as a hub, adding 29 new destinations and 

83 frequencies over the past 5 years: 

However, without a partner and local sales presence in Mexico, broad-based 

expansion south of the border is not feasible. Mexico point of sale expertise is critical, 

and, apart from Mexico City and Mexican beach markets, Delta is without this capability. 

31

36

40

49

59 60

25

30

35

40

45

50

55

60

65

2010 2011 2012 2013 2014 2015

DL LAX 

Destinations

69

90 96

106

130

152

50

70

90

110

130

150

170

2010 2011 2012 2013 2014 2015

DL LAX Daily 

Frequencies
Joint Application

Page 19

Aeromexico brings this important component to the table with a well established and 

knowledgeable sales force, agency and corporate contracts.

For its part, major transborder expansion at Los Angeles is not feasible for 

Aeromexico because it lacks network feed to reach important U.S. west coast 

destinations beyond Los Angeles that are important to the sustainability and success of 

these flights. Delta’s growing Los Angeles hub provides the essential network feed 

Aeromexico is lacking. 

The JCA also creates important scheduling efficiencies through the 

establishment of a Los Angeles hub. For example, a LAX arrival from the Eastern 

United States at 5pm would typically remain on the ground at Los Angeles until the next 

day because it is too late to turn the flight back and arrive in the middle of the night. 

However, such an aircraft is well situated and well timed to provide evening southbound 

service into Mexico, returning the following morning, and resuming a domestic 

schedule.15

In addition, the JCA can use schedule efficiencies to launch transborder routes to 

Delta hubs with Aeromexico metal during otherwise weak demand hours for domestic 

Mexico travel. Exhibit JA-5. Intra-Mexico demand is strong in the morning and evening 

hours, but weak in the mid-day. Transborder flight timings provide ideal connections to 

Delta hubs, allowing JCA to optimize the potential of beyond connections to the interior 

U.S. Id. Without the JCA, such service would not be economical for Aeromexico.

15 These operational efficiency gains are unique to shorter haul transborder operations. 

In the long haul transatlantic JCA’s there is less scheduling flexibility because a single 

widebody aircraft typically flies the same rotation each day with ground time that is 

insufficient to capitalize on new route opportunities. 

 
Joint Application

Page 20

4. Increased Frequency and Improved Schedule at Los Angeles 

and New York.

The JCA will increase service and offer an improved schedule in the two largest 

U.S.-Mexico City routes – Los Angeles and New York. The JCA plans to increase 

service on the LAX-MEX route by two frequencies (from six to eight) and on the JFKMEX route by one (from 5 to 6).

Through metal neutrality, the JCA provides the carriers with the incentives to 

offer the best and most attractive overall schedule, rather than each carrier competing in 

the peak time channel. Schedules will be spread out to create a two hour shuttle service 

on LAX-MEX and optimize time of day coverage on JFK-MEX:

5. Improved Service Between the U.S. and Mexico Regional 

Cities.

Some of the fastest growing U.S.-Mexico markets are smaller Mexican regional 

cities. It is not practical for Delta to serve these markets nonstop from its U.S. hubs. 

However, Aeromexico serve virtually every city in Mexico from one or more of its three 

hubs at Mexico City, Monterrey or Guadalajara. 

The expansion of service by Delta into these markets through the JCA, and 

Aeromexico’s improved ability to flow traffic between these cities and the United States, 

LAX-MEX NYC-MEX
Joint Application

Page 21

will significantly improve competition and consumer choice in these rapidly developing 

markets. 

6. More Effective Sales Presence on Both Sides of the Border.

The JCA will allow Delta and Aeromexico to benefit from each other’s brand 

recognition, customer awareness, and overall sales presence on their respective sides 

of the border. Apart from Mexico City and Cancun, Delta suffers from a weak sales 

presence and recognition in Mexico. Delta also lacks expertise in dealing with unique 

distribution channels in Mexico which rely heavily on relationships with local travel 

agents and other retail ticketing outlets. 

As a result of the JCA, Delta will gain access to Aeromexico’s strong presence in 

the Mexico, and conversely, Aeromexico will gain access to Delta’s U.S.-based sales 

presence and resources. This presence will strengthen the ability of the JCA Parties to 

market their products – and thereby attract more customers who will enjoy the benefits 

of an improved network offering – in both the United States and Mexico. The JCA 

Parties will be able to compete more effectively with larger rival carriers, and meet the 

strong and growing competitive challenge of new entrant carriers on transborder routes 

including Interjet, Volaris and Southwest. 

7. Airport Co-location and Streamlined Service Will Improve the 

Customer Experience.

Delta and Aeromexico will strive to co-locate facilities at commonly served 

stations wherever possible. The carriers have already implemented colocation at many

commonly served airports. However, Delta and Aeromexico continue to operate out of 

separate terminals at the two most important U.S.-Mexico gateways: New York and Los 

Angeles. 
Joint Application

Page 22

The Joint Applicants view making the investment and devoting additional facilities 

to implement co-location at JFK and LAX as a top JCA priority. Co-location will improve 

the customer experience and reduce minimum connecting times.

B. The JCA’s Substantial Consumer Benefits that Cannot Be Achieved 

without Antitrust Immunity. 

As described above, the Proposed Alliance will enable improvements in 

frequencies, schedules, capacity, available nonstop routes, and behind-and-beyond 

connections. These enhancements mean that the JCA Parties will be able to offer an 

overall network of flights that is much more attractive and useful to consumers. As a 

result of the improvements in quality created by the JCA, Delta and Aeromexico will be 

able to attract additional passengers. Moreover, the JCA will be able to offer new 

nonstop service and stimulate demand that would not be possible on a stand alone 

basis. Taken together the benefits of the JCA network will substantially increase service 

and consumer benefits. 

Although Delta and Aeromexico already codeshare on U.S.-Mexico routes, 

antitrust immunity is necessary to realize the overwhelming majority of consumer 

benefits that an immunized metal-neutral codeshare creates. In a non-immunized 

relationship between competing carriers, each carrier is incentivized to take a restrictive 

approach in sharing its network with its partners. A carrier in such a relationship will 

restrict inventory classes, impose less favorable prorate terms, and price tickets to 

maximize profit for itself, rather than across the carriers in the relationship – all of which 

results in less traffic flowing across the shared networks and less effective competition 

with rival carriers. This has been the experience of Delta and Aeromexico. By contrast, 

in an immunized JCA the carriers have a common incentive to maximize contribution for 
Joint Application

Page 23

the JCA as a whole because they are indifferent as to which carrier operates a given 

flight. 

A grant of antitrust immunity would allow Delta and Aeromexico to codeshare on 

a metal-neutral basis. This harmonization of incentives would eliminate double 

marginalization pricing and other inefficiencies that result from non-metal neutral 

codeshares. In addition, antitrust immunity would allow the JCA Parties to coordinate 

flight times in order to maximize connectivity across both carriers. As the Department 

recognized in DOT Order 2009-7-10:

By implementing an economic benefit-sharing agreement, 

carriers within the alliance are motivated to perform 

alliance-focused network planning, sales, and 

management, thereby benefiting a broad range of 

consumers seeking a better, seamless transportation 

product. . . . By pooling resources to improve the overall 

service offering, and by sharing financial gains and losses, 

we find that the partners are able to harmonize the global 

network and become indifferent as to which of them 

collects the revenue or operates the aircraft over a given 

itinerary. They are thus able to focus their efforts on 

gaining the customer’s business by providing the best 

available fare, schedule, and routing between two cities.16

We note that Aeromexico briefly served the Atlanta-Mexico City route from July 

2012 to April 2014. Aeromexico was granted only limited access to Delta’s massive hub 

feed beyond Atlanta and was not able to carry enough local traffic to make the route 

sustainable. The story would be much different under an immunized alliance scenario 

where the partners are indifferent to the operating carrier and both are motivated to 

make the flight a success. 

16 Continental/Star Alliance, DOT Order 2009-7-10, at 15.

 
Joint Application

Page 24

VI. U.S.-Canada Experience Confirms The Compelling Benefits of Transborder 

Joint Alliances. 

Experience with the liberalized transborder agreement with Canada in the mid1990’s was characterized by rapid capacity growth due to close proximity and removal of 

restrictions on high demand transborder routes (similar to U.S./Mexico today). Shorter 

distances facilitate quick growth with less expensive narrowbody aircraft. Transborder

services increased by 43 percent in the first two years of the agreement. 

This was followed by a second major surge in capacity by the JCA partners. The

following chart shows transborder capacity from the grant of full immunity to the 

United/Air Canada JCA in October, 2012 through the end of 2014. United/Air Canada 

transborder growth was nearly double the rate of the rest of the industry -- and is 

dramatically higher than UA/CO/AC’s systemwide narrowbody capacity, which was 

essentially flat:

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Mar-94

May-94

Jul-94

Sep-94

Nov-94

Jan-95

Mar-95

May-95

Jul-95

Sep-95

Nov-95

Jan-96

Mar-96

May-96

Jul-96

Sep-96

Nov-96

Jan-97

U.S.-Canada

(ASMs in Billions)

27%

43%

 Op  
Joint Application

Page 25

This experience in the U.S.-Canada transborder market – the most closely 

analogous market to Mexico – strongly supports the Joint Applicants’ projections that

approval of an immunized transborder alliance between Delta and Aeromexico will lead 

to capacity growth and service expansion.

VII. The Proposed Alliance Will Improve Competition and Consumer Choice on 

U.S.-Mexico Routes and Will Not Reduce Competition in Any Relevant 

Market.

The Proposed Alliance will enable Delta and Aeromexico to form a more attractive joint 

network to compete more effectively with American, United and rapidly expanding new 

entrant carriers serving transborder routes. The existing networks of Delta and 

Aeromexico are highly complementary; the two carriers compete on only two nonstop 

routes, JFK-MEX and LAX-GDL. Robust nonstop and one-stop competition already 

exists on these routes and will continue to intensify once the liberalized transborder 

bilateral aviation agreement is implemented.
Joint Application

Page 26

A. The Proposed JCA Will Enhance Competition.

Far from reducing or eliminating competition in any relevant markets, the 

proposed JCA will enhance competition on the U.S.-Mexico routes. The extensive 

benefits will include new routings, service that is optimized across time channels, more 

schedule flexibility for travelers and greater connecting options—in short, a better 

product for consumers. 

1. United States-Mexico

Mexico is the second largest international market from the U.S. (behind Canada) 

and is by far the largest U.S. international market without a liberal aviation agreement. 

Exhibit JA-6. More than 25 million passengers traveled nonstop between the two 

countries last year. Id. As shown in the following table the U.S.-Mexico marketplace is 

served by numerous U.S. and Mexico carriers, including new entrants, each with 

competitively significant market shares:

Whereas today Delta and Aeromexico trail American and United as distant third 

and fourth place competitors, under the Proposed Alliance there would be three network 

carriers of roughly equal size, plus three strong and growing new entrants. 

25%

22%

14%

11%

8% 6%

4% 3% 2% 2%

0%

5%

10%

15%

20%

25%

30%

U.S.-Mexico Seat Share
Joint Application

Page 27

2. Overlap City-Pairs

There are only two transborder city-pairs on which Delta and Aeromexico offer 

overlapping nonstop service: New York-Mexico City and Los Angeles-Guadalajara. On 

both of these routes, the proposed alliance will not reduce competition, but will enable 

improved service, more attractive schedules, and enable new entry consequent with 

entry into force of the new bilateral aviation agreement. 

With only two Aeromexico-Delta overlapping nonstop routes there are far fewer 

overlaps than were involved in other alliances for which ATI was granted. For example, 

the oneworld carriers had eight nonstop overlapping routes when the Department 

granted oneworld antitrust immunity. 2010 oneworld ATI, DOT Order 2010-2-8, at 21 

(Table 5) (DFW/BOS/ORD/MIA/LAX/NYC-London, MIA-Madrid, NYC-Paris). The Star 

Alliance carriers had six nonstop overlapping routes when the Department granted ANA, 

United, and Continental antitrust immunity, and the oneworld Alliance carriers had three 

nonstop overlapping routes when the Department granted American and Japan Airlines 

antitrust immunity. 2010 U.S.-Japan Alliance Case, DOT 2010-10-4, at 9 (Table 3) 

(Star: WAS, CHI, SFO, HNL, NYC, LAX; oneworld: CHI, NYC, LAX). 

No. of Overlapping Nonstop 

City-Pair Routes DOT Order

2010 oneworld ATI 8 2010-2-8

2010 U.S.-Japan Alliance 

(UA/ANA - Star)

6 2010-10-4

2010 U.S.-Japan Alliance 

(AA/JAL - oneworld)

3 2010-10-4

Aeromexico-Delta 2
Joint Application

Page 28

a. New York-Mexico City

New York-Mexico City is highly competitive with four carriers offering nine daily 

nonstop flights. Moreover, Interjet has just published schedules doubling its service from 

one flight to two: 

Airline Daily Flights

InterJet 2x

Aeromexico 4x

Delta 1x

United 2x

Under a new liberal aviation agreement American is almost certain to enter the 

JFK-MEX route. New entry will also be enabled by Mexican carriers, notably Volaris, 

because both Mexican designations are fully occupied by Aeromexico and Interjet.

In addition to existing and new nonstop competition on the route one stop 

services provide an effective competitive constraint with approximately 20 percent of 

New York City-Mexico City passengers utilizing a connecting option. 

Consequently, the proposed JCA will not allow Delta and Aeromexico to “impose 

and sustain supra competitive prices or reduce service levels below competitive 

levels.”17 The immunized JCA is not likely to result in price increases. Rather, given the 

increased competition and capacity on the route, consumers are likely to benefit. 

17 SkyTeam II ATI, DOT Order 2008-4-17, at 12.

 
Joint Application

Page 29

b. Los Angeles-Guadalajara

Los Angeles-Guadalajara is also highly competitive with five carries offering eight

daily nonstop flights:

Airline Daily Flights

American 1x

Aeromexico 2x

Alaska 1x

Delta 2x

Volaris 2x

And, as with New York, the liberal transborder agreement will allow for new entry 

and competition. Similarly, approximately 20 percent of passengers choose a 

connecting alternative. Therefore, the proposed JCA will not allow Delta and 

Aeromexico to “impose and sustain supra competitive prices or reduce service levels 

below competitive levels”18 

B. Substantial New Entry Will Be Enabled.

Importantly, under the new bilateral agreement, entry constraints on New YorkMexico City and Los Angeles Mexico City will be removed triggering potential new entry 

by carriers including American, JetBlue, Interjet and Volaris. Interjet has 70 new aircraft 

on order, and Volaris 75, making them formidable transborder competitors. Competition 

on dense routes such as Los Angeles and New York will increase, creating new options 

for consumers. 

18 SkyTeam II ATI, DOT Order 2008-4-17, at 12. 

 
Joint Application

Page 30

VIII. Granting ATI is Consistent With Mexico’s Expectations in Entering Into a 

Liberalized Transborder Agreement.

Entry into force of the newly initialed transborder agreement will create new 

opportunities for air carriers and produce enormous benefits for travelers and shippers 

and the U.S. and Mexican economies. One of the key concerns voiced by the Mexican 

side was the ability of Aeromexico to enter into an immunized arrangement with a U.S. 

carrier. Following the demise of Mexicana, Aeromexico is Mexico’s only remaining 

network carrier. Competition on transborder routes will intensify with the elimination of 

designation limitations, facilitating new entry by Mexican LCCs as well as major U.S. 

carriers. By forming a partnership with Delta, Aeromexico can tap into additional traffic 

flows, grow its network, and become a more effective and durable competitor. The Joint 

Applicants understand that the approval of antitrust immunity is an important 

consideration weighing on Mexico’s decision to initial and ratify the agreement. 

The existence of liberalized agreements with the United States has long been a 

public interest factor that is a prerequisite to approval of an ATI application. The Joint 

Applicants submit that the fully liberalized transborder agreement meets this 

requirement. The United States entered into a similar open transborder agreement with 

Canada, and, under the auspices of that agreement the Department granted antitrust 

immunity to both the United/Air Canada and American/Canadian immunized alliances. 

Order 97-9-21; Order 96-7-21. 

In addition, DOT has long supported the formation of international airline 

alliances as an important step towards the further liberalization and integration of the 

international air transport market. In a 1999 study of airline alliances, DOT expressly 
Joint Application

Page 31

recognized and endorsed the emergence of immunized alliances as a valuable 

surrogate for airline mergers and other forms of consolidation:19

The airline industry, in response to consumer demand, 

sees the enormous growth potential for the over-regulated 

and under-served international market, and individual 

airlines are trying to position themselves to participate in 

that growth. The resulting development of large strategic 

alliances, together with code sharing and other marketing 

arrangements is changing the structure of the airline 

industry and is generating new pressures to overcome the 

limitations of restrictive bilateral agreements. They have 

provided a way for carriers to mitigate the limitations of 

bilateral agreements, ownership restrictions, and licensing 

and control regulation.

In prior ATI decisions, the DOT has found that a grant of antitrust immunity would 

permit the JCA Parties to produce significant efficiencies. “Generally speaking, a grant 

of antitrust immunity may enable airlines to achieve merger-like synergies, boost 

capacity, and deliver lower prices for some itineraries.”20 Delta and Aeromexico have 

evidenced firm plans to do the same. The emphasis and support U.S. and Mexican

officials have attached to the formation of airline alliances support approval of antitrust 

immunity for the Delta/Aeromexico JCA. Immunity would also be consistent with prior 

DOT decisions.21

19 Office of the Secretary, U.S. Department of Transportation, International 

Developments: Global Deregulation Takes Off (December 1999), at 4.

20 Delta/Virgin Australia/Pacific Blue, DOT Order 2011-5-8, at 13.

21 As DOT observed in its Order to Show Cause in the KLM/Northwest antitrust 

immunity case:

We believe that the Netherlands would consider it to be 

inconsistent with the Open Skies spirit if we denied the 

applicants’ request, unless we had substantial grounds for taking 

such action (e.g., because the proposal would substantially 

reduce competition in several markets without any offsetting 

benefits). DOT Show Cause Order 92-11-27, at 17 

(November 20, 1992).

 
Joint Application

Page 32

IX. The Joint Applicants Will Not Implement the Alliance Agreements without 

Antitrust Immunity.

The JCA expressly provides for coordinated scheduling, yield management, 

inventory allocation, and pricing, joint purchasing, joint decision-making on new routes, 

and revenue sharing – and these are precisely the aspects of the JCA arrangement that 

will produce the largest consumer benefits. To proceed with such joint activities absent 

antitrust immunity would involve prohibitive antitrust risk and regulatory and legal 

uncertainty.22 In other cases, the Department has acknowledged that the consumer and 

competition benefits from such agreements cannot be attained without immunity.23

X. Mexico Has Established Procedures for Antitrust Approval of Airline 

Alliances.

In Mexico, antitrust matters are governed by (i) Article 28 of the Political 

Constitution of the United Mexican States (Constitución Política de los Estados Unidos 

Mexicanos); (ii) the Federal Law of Economic Competition (Ley Federal de Competencia 

Económica; the “Current Competition Law”); and (iii) the Regulatory Provisions to the 

Competition Law (Disposiciones Regulatorias de la Ley Federal de Competencia 

Económica); and the Federa; Criminal Code (Codigo Pelal Federal). 

The FECC is an autonomous constitutional body with jurisdiction over 

competition issues in all areas and industries other than broadcasting and telecom 

sectors. FECC is charged with enforcing the Competition Law, and in doing so, 

preventing and investigating monopolies, illicit concentrations, barriers to competition, 

22 Airlines have had to defend themselves in multiple lawsuits driven by plaintiffs’ 

counsel involving antitrust claims, regardless of the lack of merit. See, e.g., In re 

Northwest Airlines Corp. Antitrust Litig., 208 F.R.D. 174 (E.D. Mich. 2002), review 

denied, 310 F.3d 953 (6th Cir. 2002), cert. denied, 539 U.S. 904 (2003); In re Airline 

Ticket Commission Antitrust Litig., 268 F.3d 619 (8th Cir. 2001). The risk of antitrust 

litigation remains a significant concern.

23 See, e.g., American Airlines/British Airways, DOT Show Cause Order 2010-2-3, at 

30 (listing expected public benefits and stating that “A grant of antitrust immunity is, we 

tentatively find, necessary to achieve most of these benefits”). 

 
Joint Application

Page 33

and monopolistic practices which purpose or effect is to diminish or hinder free 

competition in the Mexican territory.

Last year Mexico’s Federal Economic Competition Commission (“Commission or 

FECC”) was requested to issue an opinion with respect to:

(i) the possibility that the Mexican airlines enter into strategic alliances with 

foreign airlines; and 

(ii) the existence of a mechanism provided in the Federal Law of Economic 

Competition (herein, FLEC) in which those alliances could be analyzed 

and, if appropriate, approved by the Commission.

On November 27, 2014 FECC issued its opinion (No. CFEC-275-2014) concluding that

airline JCAs would be evaluated as “concentrations” under Mexican competition law. 

More specifically:

a) An alliance between airlines- in relation to its nature and special characteristicsis a concentration that meets the thresholds provided in article 61 of the FLEC. 

b) The concentration must be notified to the Commission independently if it meets 

the thresholds that are mentioned in the Sections I to III of the article 86 of the 

FLEC.

c) The notified concentration could be authorized, not authorized or conditioned, 

depending on the risks that implies, based on each case, to the competition 

process and free competition.

Notification of a concentration would be required prior to implementing the 

Proposed Alliance. The FECC generally has 60 business days to review the notification 

and issue its resolution on the concentration submitted for its analysis. This term is 

counted from the date on which FECC has a complete file with the information that it 

requires for the analysis, including additional information that it may request 15 business 

days after the basic filing information is complete. 

 
Joint Application

Page 34

XI. Slots at Mexico City

Mexico City is a slot coordinated airport, and, while Aeromexico is the largest 

operator, Aeromexico’s share of slots at MEX is lower than at other congested airports 

where hub operators have received antitrust immunity:

Mexico maintains a public registry of slots, which are held by a diverse array of 

operators: http://www.aicm.com.mx/negocios/slots/actualizacion-de-slots-durante-latemporada-de-invierno-2014-2015?periodo=0&fechaini=2015-02-15

71%

56% 56%

46% 46%

3%

2%

FRA LHR LHR Mexico City Mexico City

BA includes all IAG carriers plus American Airlines. Lufthansa includes all 

Lufthansa Group carriers and United. 

 

Top 

Carrie

+ +
Joint Application

Page 35

Existing Mexican regulations provide for buy/sell/trade, requiring, essentially that 

the transferring carrier have used the slots for a year and that both carriers are current 

on their airport and navigation charges:

Regulation of the Airports Act

Article 98. Landing and takeoff slots assigned to the carriers can be 

exchanged or transferred with other carriers, provided that both are 

current in the payment of the services indicated in article 96 of this 

regulation; timetable in question has been used for at least one year by 

the original carrier and notify the airport manager of operation, specifying 

the timetable concerned.

The airport administrator may withdraw landing and takeoff schedules 

assigned to the air carriers when they exchange them or transferred in 

violation of the preceding paragraph or have debts due in the payment of 

the services referred to in article 96 of this regulation, and must notify the 

carrier 90 days in advance.

It is expected that within the next year IATA World Slot Guidelines will be 

adopted at MEX, providing additional consistency and uniformity with other slot 

coordinated airports around the world.

Finally, efforts are underway to construct a new, expanded airport within the next 

four years serving Mexico City which will alleviate current capacity issues.

XII. Conclusion

Approval of and antitrust immunity for the Alliance Agreements is in the public 

interest and will create important consumer benefits, including the introduction of new 

U.S.-Mexico services, the establishment of a west coast JCA hub at LAX, improved 

schedules on JFK-MEX and LAX-MEX, and upgauging on numerous routes. Antitrust 

immunity is essential to the full realization of the consumer benefits and procompetitive 

effects of the JCA. 
Joint Application

Page 36

WHEREFORE, the Joint Applicants respectfully request that the Department approve, 

and grant antitrust immunity for, the Alliance Agreements pursuant to 49 U.S.C. §§ 

41308 and 41309. 

Respectfully submitted,

_____________________________

Robert E. Cohn

Patrick R. Rizzi

Hogan Lovells US LLP

Counsel for

AEROVIAS DE MEXICO, S.A. DE C.V

________________________________

Alexander Van der Bellen, 

Managing Director,

Government Regulatory and International 

Affairs and Associate

General Counsel

DELTA AIR LINES, INC.
Joint Application for Antitrust Immunity

Exhibits

March 31, 2015
American and United Dominate US-Mexico Service

3% 25%

Transborder Market Share

Delta and Aeromexico are distant 3rd and 4th

competitors in the US-Mexico market

25%

22%

14%

11%

AA UA AM DL

Full-Year 2014 OAG Scheduled Seat Share as of March 11, 2015

JA-1
JA-2

Under an ATI Joint Venture, Aeromexico and Delta

Can Offer A More Expansive Network for Consumers

232 X 47 = 10,904

DL U.S. Points AM Mexico Points Transborder City Pairs

Individually, Delta and 

Aeromexico serve fewer 

U.S.-Mexico city pairs than 

rival network carriers 

With a combined ATI Joint Venture, 

Delta and Aeromexico can offer a 

more attractive network to 

customers

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

U.S.-Mexico City Pairs

DL+AM UA AA/US DL AM
LAX

SAN

SEA

PHX

MSP

ORD DTW

ATL

MSY

MID

MEX

MLM

PVR

SJD

ZCL

MTY

AUS

DFW

AGU

QRO

Joint Venture Creates Value Through Expanded

Transborder Network And Strategic Market Growth

JV provides growth opportunities in heavily contested markets

• JV enabled service and competitive benefits will allow Aeromexico/Delta to launch up to 14 new 

transborder routes over next five years, in addition to capacity increases in currently restricted markets

• Network expansion allows JV to capture growing demand with 39 new daily departures and creates 

2,500 new online connections between U.S./Canada and Mexican points on the JV network

Probable New JV Transborder Markets (subject to review post ATI)

JA-3
Joint Venture Enables Upgauging That Will Accommodate Increased 

Demand and Reduce Unit Costs 

JA-4

Potential Transborder Routes to be 

Example Unit Cost Reductions From Upgauges Upgauged (Subject to review post ATI)

• Joint Venture will create stronger traffic flows, creating incentive for Delta and AeroMexico to upgauge

transborder routes to higher capacity, lower unit cost aircraft types

-12%

A319 737-800

737-800 737-900

737-900 757-200

-8%

-3%

Route Baseline 

Gauge

Future 

Gauge % Change

SLCPVR 95 150 59%

SLCSJD 101 150 49%

MIAMTY 76 99 30%

SLCGDL 76 99 30%

IAHMEX 99 123 25%

ATLCUN 149 180 21%

MIAMEX 133 160 20%

MCOMEX 134 160 20%

DTWCUN 153 180 18%

LAXMTY 76 88 15%

LAXPVR 131 150 15%

DTWMEX 126 143 13%

ORDMEX 141 160 13%

JFKCUN 160 180 13%

DTWMTY 80 90 12%

LAXMEX 144 160 11%

SFOMEX 145 160 11%

ATLMEX 124 134 8%

LASMEX 150 160 7%

ATLPVR 150 160 7%

SLCCUN 150 160 7%
Joint Venture Creates Scheduling Efficiencies – Allowing Incremental 

Flights That Would be Uneconomical Without JV

• Joint Venture can leverage schedule efficiencies to launch transborder routes during weak demand 

hours for domestic Mexico travel to Delta hubs with AeroMexico metal

• Transborder flight timings provide ideal connections to Delta hubs, allowing JV to leverage full 

potential of beyond connections. Without the JV, such service would be not be economical for AM

Domestic Mexico time of day preference creates demand gap in middle of day

JV allows AeroMexico to utilize aircraft on Transborder during soft demand 

periods in Domestic Mexico network

0000 0100 0200 0300 0400 0500 0600 0700 0800 0900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 2200 2300

Domestic Mexico Demand by Time of Day

Demand Gap in Middle of Day

MEX

0815

AGU

0915

AGU

1015

LAX

1145

High Demand in 

Domestic Mexico

Low Demand in 

Domestic Mexico

LAX

1300

AGU

1815

Low Demand in 

Domestic Mexico

AGU

1915

MEX

2015

High Demand in 

Domestic Mexico

Ideal times to connect 

to Delta LA Hub

JA-5
U.S.-Mexico Transborder Market Is Poised For Growth

JA-6

29.7

25.3

16.2

9.2 9.1 9.0 7.6 7.0 7.0 6.1

Canada Mexico UK China+HK Japan Germany France Brazil Dominican

Republic

Italy

Top 10 U.S. to Foreign Country Markets by Passenger Volume

The U.S. is Mexico’s top foreign 

market

• Mexico is the second largest U.S. international market by passenger traffic

• U.S.-Mexico market is poised for growth

– Mexico’s GDP is projected to expand at 4% annually over the next five years

– Of U.S. Hispanic population, Mexican Hispanic population is ~65%, and has nearly tripled since 

1990

Passengers/Day Each Way (000) 

Full-year 2014 Delta enhanced demand data 
Summary of JV Agreement

Key Terms Details

JV Scope • Scheduled service on all nonstop routes between the U.S. and Mexico (excl. cargo-only flights and 

private charters)

• Parties to engage in commercial cooperation on all beyond points within Mexico and the U.S. 

Exclusivity • Aeromexico and Delta will be exclusive partners in U.S./Mexico market with certain existing 

relationships grandfathered 

Network 

Governance

• Capacity governance by mutual consent with equitable share of growth by each carrier

• Limited unilateral capacity flexibility in four beach markets (CUN, CZM, PVR, SJD) and limited other 

markets

Commercial 

Cooperation

• Full coordination of Revenue Management, Marketing, Sales and Distribution activities with 

delegated and/or co-located staff

• Aligned technologies to facilitate “metal-neutrality”

• Full codesharing on all transborder routes and beyond points within U.S. and Mexico

• Expanded co-handling / co-location opportunities 

• Full reciprocal FFP benefits

• Coordinated Cargo activities

Financial

Settlement

• 50/50 sharing of incremental profits above 2015 baseline period which includes 20% of the beyond 

revenues connecting to/from a transborder market within North America and Central America

• FFP economics shared in JV subject to 2015 baseline

Management • Six Working Groups (Network, Revenue Management, Customer, Operations, Sales and Finance) 

meeting at least four times per year initially

• Executive Steering Committee meetings at least four times per year initially

• Codes of conduct to be established and approved by Steering Committee

Timing • JV established no later than 30 days after all regulatory approvals have been received with first joint 

network plan implemented within 90 days

Term • 15 year minimum term, auto-renewal, three-year notice period
CERTIFICATE OF SERVICE

A copy of the foregoing Application has been served this 31st day of March, 2015, 

upon the following persons via email:

Air Carrier Name Email Address

Alaska Airlines David Heffernan dheffernan@cozen.com

Alaska Airlines Jeremy Ross jeremy.ross@alaskaair.com

American Howard Kass howard.kass@aa.com

American Robert Wirick robert.wirick@aa.com

Frontier Mark Atwood matwood@cozen.com

Frontier Steve Lachter stephen.lachter@lachterlaw.com

Hawaiian/JetBlue Jonathan Hill jhill@cooley.com

Hawaiian/JetBlue Parker Erkmann perkmann@cooley.com

JetBlue Robert Land robert.land@jetblue.com

Republic Bob Cohn robert.cohn@hoganlovells.com

Republic Pat Rizzi patrick.rizzi@hoganlovells.com

Southwest/AirTran Bob Kneisley bob.kneisley@wnco.com

Southwest/AirTran Leslie Abbott leslie.abbott@wnco.com

Spirit Airlines David Kirstein dkirstein@yklaw.com

Spirit Airlines Joanne Young jyoung@yklaw.com

Sun Country John Fredericksen john.fredericksen@suncountry.com

Sun Country Thomas Ting thomas.ting@suncountry.com

United Dan Weiss dan.weiss@united.com

United Thomas Bolling thomas.bolling@united.com

Virgin America Barbara Russell barbara.russell@virginamerica.com

Brian Hedberg brian.hedberg@dot.gov

Robert Finamore robert.finamore@dot.gov

Brett Kruger brett.kruger@dot.gov

Reese Davidson reese.davidson@dot.gov

Info info@airlineinfo.com